Productivity Growth, Efficiency Change and Technical Progress: A Case Study of Australian Private Sector Industries

This paper examines productivity growth in the Australian private sector industries using annual time series data for 1968-69—1995-96. The Malmquist indices of total factor productivity growth (TFP) are computed and decomposed into the components of technical progress and efficiency change for each of the seven industries. Our investigation reveals that five industries have shown productivity growth during the sample period. The highest annual productivity growth has been recorded by transport, storage and communication industry (2.6 per cent) followed by mining (2.1 per cent) and manufacturing (1.2 per cent). Productivity growth has been low in agriculture (0.8 per cent) and wholesale and retail trade industry (0.1 per cent). The construction and the recreation and personal services have recorded productivity regress. In the former, technological regress is accompanied by no changes in technical efficiency whereas in the latter low growth of technology (0.2 per cent) has been offset by a higher rate of decline in technical efficiency. The results are, by and large, useful for policy makers in designing industry specific policies.