Australia's mining productivity paradox: implications for MFP measurement
This paper investigates the mining industry's poor productivity performance as measured by the conventional multifactor productivity (MFP) index during the recent mining boom in Australia. We derive a relationship between the measured and 'true' MFP growth that separates the effects o...
| Main Authors: | , |
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| Format: | Working Paper |
| Published: |
Centre for Research in Applied Economics, Curtin Business School
2010
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| Online Access: | http://hdl.handle.net/20.500.11937/36907 |
| _version_ | 1848754901395439616 |
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| author | Zheng, S. Bloch, Harry |
| author_facet | Zheng, S. Bloch, Harry |
| author_sort | Zheng, S. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | This paper investigates the mining industry's poor productivity performance as measured by the conventional multifactor productivity (MFP) index during the recent mining boom in Australia. We derive a relationship between the measured and 'true' MFP growth that separates the effects of returns to scale, market power, capacity utilisation and natural resource inputs from measured MFP. Using exploration capital as a proxy for natural resource inputs, a translog variable cost function is estimated to provide parameter estimates for the various components in the decomposition equation. The results show that the average MFP growth in Australian mining based on the dual measure of technical change is nearly 2% over the sample period 1974-75 to 2006-07, rather than 0.01% from the published index. The difference arises because changes in natural resource inputs have subtracted 1.14 percentage points from the 'true' MFP growth, while the effects of capacity utilisation and returns to scale are also negative but less sizeable in impact. |
| first_indexed | 2025-11-14T08:47:46Z |
| format | Working Paper |
| id | curtin-20.500.11937-36907 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T08:47:46Z |
| publishDate | 2010 |
| publisher | Centre for Research in Applied Economics, Curtin Business School |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-369072017-01-30T13:58:24Z Australia's mining productivity paradox: implications for MFP measurement Zheng, S. Bloch, Harry MFP Mining productivity This paper investigates the mining industry's poor productivity performance as measured by the conventional multifactor productivity (MFP) index during the recent mining boom in Australia. We derive a relationship between the measured and 'true' MFP growth that separates the effects of returns to scale, market power, capacity utilisation and natural resource inputs from measured MFP. Using exploration capital as a proxy for natural resource inputs, a translog variable cost function is estimated to provide parameter estimates for the various components in the decomposition equation. The results show that the average MFP growth in Australian mining based on the dual measure of technical change is nearly 2% over the sample period 1974-75 to 2006-07, rather than 0.01% from the published index. The difference arises because changes in natural resource inputs have subtracted 1.14 percentage points from the 'true' MFP growth, while the effects of capacity utilisation and returns to scale are also negative but less sizeable in impact. 2010 Working Paper http://hdl.handle.net/20.500.11937/36907 Centre for Research in Applied Economics, Curtin Business School fulltext |
| spellingShingle | MFP Mining productivity Zheng, S. Bloch, Harry Australia's mining productivity paradox: implications for MFP measurement |
| title | Australia's mining productivity paradox: implications for MFP measurement |
| title_full | Australia's mining productivity paradox: implications for MFP measurement |
| title_fullStr | Australia's mining productivity paradox: implications for MFP measurement |
| title_full_unstemmed | Australia's mining productivity paradox: implications for MFP measurement |
| title_short | Australia's mining productivity paradox: implications for MFP measurement |
| title_sort | australia's mining productivity paradox: implications for mfp measurement |
| topic | MFP Mining productivity |
| url | http://hdl.handle.net/20.500.11937/36907 |