IDEAS home Printed from https://ideas.repec.org/p/tsy/wpaper/wpaper_tsy_wp_2006_4.html
   My bibliography  Save this paper

Perspectives on Australia's productivity prospects

Author

Listed:
  • Graeme Davis

    (Treasury, Government of Australia)

  • Jyoti Rahman

    (Treasury, Government of Australia)

Abstract

Productivity is the key driver of economic growth and prosperity over the long run. It is possible to think of Australia's productivity growth as consisting of two elements: Australia's productivity catching up to its steady state level relative to the global technological frontier; and an outward movement of the frontier. The United States is often seen as a reasonable proxy for the global technological frontier. Over the past four decades, Australia's productivity has been mostly between 75 and 85 per cent of that of the US. This productivity gap can at least in part be explained by a combination of differences in: capital per worker; educational attainment; microeconomic policies; and the geographic and historical context in which the two economies operate. Economic reforms of the recent decades have helped improve Australia's productivity level relative to the frontier and narrow the productivity gap. This narrowing of the gap has manifest itself as an increase in Australia's productivity growth rate. Additional reforms could help narrow the productivity gap further. However, in the long run, Australia's productivity growth will be primarily determined by technological progress at the frontier.

Suggested Citation

  • Graeme Davis & Jyoti Rahman, 2006. "Perspectives on Australia's productivity prospects," Treasury Working Papers 2006-04, The Treasury, Australian Government, revised Sep 2006.
    • Handle: RePEc:tsy:wpaper:wpaper_tsy_wp_2006_4
    as

    Download full text from publisher

    File URL: http://archive.treasury.gov.au/documents/1157/PDF/TWP_04_2006.pdf
    File Function: First version, 2006
    Download Restriction: no

    References listed on IDEAS

    as
    1. Andrea Bassanini & Stefano Scarpetta, 2001. "Does Human Capital Matter for Growth in OECD Countries?: Evidence from Pooled Mean-Group Estimates," OECD Economics Department Working Papers 282, OECD Publishing.
    2. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
    3. Dean Parham, 2004. "Sources of Australia's Productivity Revival," The Economic Record, The Economic Society of Australia, vol. 80(249), pages 239-257, June.
    4. Alan Winters, L. & Martins, Pedro M. G., 2004. "When comparative advantage is not enough: business costs in small remote economies," World Trade Review, Cambridge University Press, vol. 3(03), pages 347-383, November.
    5. Chad Syverson, 2004. "Market Structure and Productivity: A Concrete Example," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1181-1222, December.
    6. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    7. Robert J. Gordon, 2003. "Exploding Productivity Growth: Context, Causes, and Implications," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 207-298.
    8. Prescott, Edward C, 1998. "Needed: A Theory of Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-551, August.
    9. repec:dgr:rugggd:gd-83 is not listed on IDEAS
    10. Timmer, Marcel P. & Ypma, Gerard, 2006. "Productivity Levels in Distributive Trades: A New ICOP Dataset for OECD Countries," GGDC Research Memorandum GD-83, Groningen Growth and Development Centre, University of Groningen.
    11. Bryn Battersby, 2007. "Does distance matter?: The effect of geographic isolation on productivity levels," OECD Economic Studies, OECD Publishing, vol. 2006(1), pages 205-225.
    12. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Philip McCann, 2009. "Economic geography, globalisation and New Zealand's productivity paradox," New Zealand Economic Papers, Taylor & Francis Journals, vol. 43(3), pages 279-314.
    2. Thierry Tressel, 2008. "Does Technological Diffusion Explain Australia’s Productivity Performance?," IMF Working Papers 08/4, International Monetary Fund.

    More about this item

    Keywords

    Productivity; convergence; technological progress;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tsy:wpaper:wpaper_tsy_wp_2006_4. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (The Treasury (Commonwealth of Australia)). General contact details of provider: http://edirc.repec.org/data/trgovau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.