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Economic Output and Productivity Performance of the Australian States

This presentation explores the economic output and productivity performance of the Australian states. It covers various factors such as GSP and GSI per capita, industry structure, decomposition of GSI growth, labor productivity, capital stock estimates, and multifactor productivity. The findings highlight the key drivers of growth and provide insights for improving productivity estimates.

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Economic Output and Productivity Performance of the Australian States

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  1. Economic Output and Productivity Performance of the Australian States Presentation to Productivity Perspectives Workshop ‘07 Presenter: Gudrun Meyer-Boehm The research has been undertaken by Jim Hurley, Trinh Le, Sid Shanks, Mark Upcher of the Office of Economic and Statistical Research, Qld Treasury and their assistance is greatly appreciated. The content of this presentation should not be taken as necessarily reflecting their views and opinions.

  2. Overview • GSP and GSI per head of population • Importance of the industry structure • Decomposition of GSI per capita growth • Importance of labour productivity • S/T Net Capital Stock and Capital Services estimates • Decomposition of Labour Productivity • Capital Deepening and MFP

  3. Real GSP per head of population,States, 1984-85 to 2005-06 Average Annual Growth Rates

  4. Real GSP per head of population relative to the Rest of Australia, 1984-85 to 2005-06

  5. Real GSI per head of population relative to the Rest of Australia, 1991-92 to 2005-06

  6. Average annual growth rates, per cent, 1993-94 to 2005-06

  7. Contribution to GDI/GSI growth per head, per cent, 1993-94 to 2005-06

  8. Labour Productivity1984-85 to 2005-06 Average Annual Growth Rates

  9. Labour Productivity, Capital Deepening and MFP • Labour productivity growth • Capital deepening • Multifactor productivity • S/T capital stock data • Net capital stock estimates • Capital services estimates • S/T multifactor productivity data

  10. State and Territory net capital stock estimates • Research extends previous work by (Mikhailitchenko, Nguyen and Smith, 2005) • Perpetual Inventory Method accumulates State Gross Fixed Capital Formation (GFCF) by asset type • Allocation of national net capital stock to the states

  11. “Capital services” for States and Territories • Net capital stock • Productive capital stock • “Capital services” constructed by scaling-up net capital stock growth rates to align with Australian market sector growth rates by asset type • Scaling Factors - ratio between the Australian capital service index and the Australian net capital stock index.

  12. Capital services and Net Capital stock, Australian market sector, 1974-75 to 2005-06

  13. Capital Stock and Services Growth, average annual growth, 1984-85 to 2005-06

  14. State Multifactor Productivity,average annual growth

  15. Decomposition of Labour Productivity,average annual growth, 1984-85 to 2005-06

  16. Conclusions • Labour productivity key driver of output and income growth • ToT effect beneficial for all States, although different magnitude • Industry structure appears important • Updated net capital stock estimates • Capital service method looks promising for construction of improved state and territory productivity estimates • Contribution of MFP to LP growth has been strong for most States, in particular since 1993-94. • Magnitude of MFP and capital deepening contributions to LP growth varies across States.

  17. Further work • Further testing of capital methods • Treatment of land and inventories, • Quality of labour adjustment • Can GSP(P) data be exploited to improve estimates • Better measurement of non-market sector

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