Productivity Measurement and Analysis

image of Productivity Measurement and Analysis

Productivity measurement and analysis are the main topics addressed in this book, which brings together contributions presented and discussed in two international workshops organized by the Statistics Directorate and the Directorate for Science, Technology and Industry (DSTI) of the OECD. The first workshop was organised jointly by the OECD with Fundaccion BBVA and the Instituto Valenciano de Investigaciones Económicas and held in Madrid in October 2005, and the second one was organized jointly by the OECD and the Swiss Federal Statistical Office and the State Secretary for Economic Affairs of Switzerland and held in Bern in October 2006. The two workshops brought together representatives of statistical offices, central banks and other branches of government in OECD countries that are engaged in the analysis and the measurement of productivity developments at aggregate and industry levels.


Empirical Analysis of the Effects of R&D on Productivity

Implications for productivity measurement?

There is little, if any, dispute that R&D is a major source of long-term productivity growth. But there is empirical uncertainty about the magnitude of the productivity gains from R&D. This quantitative uncertainty was again highlighted in a study by two colleagues at the Productivity Commission (Shanks and Zheng 2006).224 They set out to update and extend previous time-series analysis of the effects of R&D on Australia’s productivity performance.225 Previous studies had generated estimates of returns to Australian R&D that seemed implausibly high – a result that is not uncommon in this type of analysis, irrespective of country of investigation (Diewert 2005). With the possibility that limitations on degrees of freedom had been an issue in the previous studies, it was judged that new analysis based on a further 10 years or so of data, plus developments in quantitative tests and techniques, could provide a clearer fi x on the effects of domestic and foreign R&D on Australian productivity performance. As it turned out, the modelling results were fragile – and more so than expected. Estimates of performance effects fell within wide confi dence intervals and were sensitive to seemingly reasonable modifi cations to variable and model specifi cations. Diagnostic tests revealed standard estimating equations to be mis-specifi ed. 


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