Production Structure Characteristics and Adaptations of Productivity Growth Measures : A Survey

Abstract

Non-parametric index number and parametric econometric techniques for productivity growth measurement and interpretation are reviewed in this paper. Procedures to account for technical and market characteristics which affect productivity growth and are ignored in traditional measures are presented. Adaptations to traditional measures include the effect of scale economies, imperfect competition in output market, and inefficiency in production. The main conclusion is that a comprehensive framework that accounts for these and other characteristics is much needed. Pursuing ways to develop such a framework to refine and extend our understanding and interpretation of productivity growth has perhaps the greatest potential to tackle these and other issues found in the productivity growth literature. Along these lines, future research areas that seem to provide a strong potential direction for future work include, the effect of R&D, the effect of tax policies, and the role of government price policies on productivity growth measurements.