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Journal of Productivity Analysis

, Volume 41, Issue 2, pp 201–212 | Cite as

Australia’s mining productivity decline: implications for MFP measurement

  • Simon ZhengEmail author
  • Harry Bloch
Article

Abstract

This paper investigates the mining sector’s poor productivity performance as measured by the growth accounting formula for multifactor productivity (MFP) index during the recent mining boom in Australia. We provide an alternative measure of productivity growth by estimating a translog variable cost function, with parameters that separate productivity growth due to technical change from that due to the effects of returns to scale, capacity utilisation and natural resource inputs. The results show that the average MFP growth in Australian mining based on the dual cost-function measure of technical change is 2 % over the sample period 1974–1975 to 2007–2008, rather than −0.2 % from the published index. The difference arises because declining natural resource inputs, the effects of capacity utilisation and returns to scale have all reduced the ‘true’ MFP growth.

Keywords

Productivity Mining Measurement 

JEL Classifications

C32 L72 O40 

Notes

Acknowledgments

We thank two anonymous referees, the Guest Editors and participants at the Asia Pacific Productivity Conference 2010 for helpful comments. All errors and omissions remain the responsibility of the authors.

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Curtin UniversityPerthAustralia

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