Multifactor Productivity Growth and the Australian Mining Sector

22 Pages Posted: 12 Oct 2015

See all articles by Arif Syed

Arif Syed

Government of the Commonwealth of Australia - Bureau of Resources and Energy Economics

Quentin Grafton

The Australian National University

Dean Parham

Government of the Commonwealth of Australia - Productivity Commission

Kaliappa Kalirajan

Australian National University - Crawford School of Public Policy

Date Written: October 2015

Abstract

A commonly used, but unadjusted, measure of Australian mining multifactor productivity (MFP) fell by about one‐third over the first decade of the mining boom, coinciding with very large increases in resource prices. Using growth accounting methods and our own adjustments, based on energy use and capital‐output lags to account for depletion effects we find (i) the Australian annual average MFP growth in mining was 2.5 per cent a year between 1985–1986 and 2009–2010 compared to −0.65 per cent for the unadjusted measure and (ii) productivity growth was positive in the 2000s, albeit at a lower rate than in the 1990s. Our adjusted MFP growth measures at a state level and subsector level are greater than unadjusted productivity measures. In a complementary study using an econometric decomposition of mining MFP at a state level, we find no statistically significant effect of technological change on MFP growth in the sector, but positive and statistically significant effects of technical efficiency and scale over the period 1990–1991 to 2009–2010. Our results do not support specific policy interventions to increase productivity growth in the mining sector beyond appropriate incentives for resource exploration including the provision of precompetitive resource data.

Keywords: productivity, mining, depletion

Suggested Citation

Syed, Arif and Grafton, Quentin and Parham, Dean and Kalirajan, Kaliappa P., Multifactor Productivity Growth and the Australian Mining Sector (October 2015). Australian Journal of Agricultural and Resource Economics, Vol. 59, Issue 4, pp. 549-570, 2015, Available at SSRN: https://ssrn.com/abstract=2672042 or http://dx.doi.org/10.1111/1467-8489.12122

Arif Syed (Contact Author)

Government of the Commonwealth of Australia - Bureau of Resources and Energy Economics

51 Allara Street
Canberra, ACT 2601
Australia

Quentin Grafton

The Australian National University ( email )

Crawford School (Bldg 132)
The ANU
Acton, Canberra, Australian Capital Territory 2601
Australia

HOME PAGE: http://https://crawford.anu.edu.au/people/academic/quentin-grafton

Dean Parham

Government of the Commonwealth of Australia - Productivity Commission ( email )

Level 28, 35 Collins St.
Melbourne, Victoria, 3000
Australia

Kaliappa P. Kalirajan

Australian National University - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia
+61261258258 (Phone)

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