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Labour Productivity, Import Competition and Market Structure in Australian Manufacturing

Author

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  • James Ted McDonald
  • Mita Bhattacharya
  • Harry Bloch

Abstract

Through altering competitive conditions, globalisation can have a significant impact on productivity of the domestic economy. Foreign competition can stimulate the productivity improvements by domestic firms or it can lead to the elimination of inefficient producers. Alternatively, the threat or reality of foreign competition can impede investment in new equipment and techniques, thereby slowing the adaptation of productivity improvements. Thus, the impact of globalisation on productivity growth needs to be explored empirically. In this paper, we estimate the impact of import competition on labour productivity growth in Australian manufacturing using a panel data analysis for a three-decade period. The estimates extend and complement earlier work by Bloch and McDonald (2001), which applies panel data analysis to a sample of Australian manufacturing firms for a one-decade period. The use of industry level data in place of firm-level data, allows us to include the effects of entry or exit of firms, while the longer time period allows determine whether the impact of import competition on productivity growth changes to following micro-economic reform in the Australian economy. As with Bloch and McDonald, we also examine whether the impact of import competition varies across industries with domestic market structure. Reference: Bloch, H and J T McDonald (2001), Import Competition and Labour Productivity, Journal of Industry, Competition and Trade, 1(3), 301-319.

Suggested Citation

  • James Ted McDonald & Mita Bhattacharya & Harry Bloch, 2004. "Labour Productivity, Import Competition and Market Structure in Australian Manufacturing," Econometric Society 2004 Australasian Meetings 48, Econometric Society.
  • Handle: RePEc:ecm:ausm04:48
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    References listed on IDEAS

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    1. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March.
    2. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455, May.
    3. Richard E. Baldwin & Paul Krugman, 1986. "Market Access and International Competition: A Simulation Study of 16K Random Access Memories," NBER Working Papers 1936, National Bureau of Economic Research, Inc.
    4. MacDonald, James M, 1994. "Does Import Competition Force Efficient Production?," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 721-727, November.
    5. Harry Bloch & James McDonald, 2001. "Import Competition and Labor Productivity," Journal of Industry, Competition and Trade, Springer, vol. 1(3), pages 301-319, September.
    6. Jack High (ed.), 2001. "Competition," Books, Edward Elgar Publishing, number 1751.
    7. Havrylyshyn, Oli, 1990. "Trade Policy and Productivity Gains in Developing Countries: A Survey of the Literature," World Bank Research Observer, World Bank Group, vol. 5(1), pages 1-24, January.
    8. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-398, March.
    9. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    10. Chand, Satish, 1999. "Trade Liberalization and Productivity Growth: Time-Series Evidence from Australian Manufacturing," The Economic Record, The Economic Society of Australia, vol. 75(228), pages 28-36, March.
    11. Freedman, Craig & Stonecash, Robin, 1997. "A Survey of Manufacturing Industry Policy: From the Tariff Board to the Productivity Commission," The Economic Record, The Economic Society of Australia, vol. 73(221), pages 169-183, June.
    12. Nelson, Richard R, 1981. "Research on Productivity Growth and Productivity Differences: Dead Ends and New Departures," Journal of Economic Literature, American Economic Association, vol. 19(3), pages 1029-1064, September.
    13. Nadiri, M Ishaq, 1970. "Some Approaches to the Theory and Measurement of Total Factor Productivity: A Survey," Journal of Economic Literature, American Economic Association, vol. 8(4), pages 1137-1177, December.
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    More about this item

    Keywords

    productivity growth; Australian manufacturing;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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