Do New Zealand firms catch up to the domestic productivity frontier?

30 June 2015
New Zealand has a poor productivity track record at the level of the aggregate economy and there is little evidence of productivity “catching up” towards that of leading economies. At the same time, there is a very wide distribution of productivity levels among firms within the same industries and it is at least possible that some New Zealand firms are among the most productive in their industry globally. In this case, the relevant question is why new technologies and production techniques do not diffuse from high- to low-productivity firms within New Zealand.
As such, this paper explores technological diffusion among New Zealand firms using a model of convergence in which a firm’s multi-factor productivity (MFP) growth depends on its ability to catch up to its industry’s productivity frontier. We find that convergence to the frontier is statistically and economically important, indicating a tendency for technology to diffuse from high- to low-productivity firms. The results also indicate that firms in the services sector have slower convergence speeds than firms in the primary and goods-producing sectors. This raises questions about the extent to which firms in some parts of the services sector are exposed to, and influenced by, the domestic productivity frontier.
We also extend the base model to assess the impact of exporting and foreign ownership on MFP growth and the speed of convergence. This allows for the possibility that by exposing firms to new technologies and larger markets, international openness may enhance incentives and opportunities to adopt leading production techniques, thereby increasing the speed with which firms catch up to the productivity leader. The results suggest that firms that are more open internationally experience faster MFP growth and speed of convergence. However, greater international openness at the industry level can slow the speed with which low-productivity firms converge towards the frontier. This may reflect the fact that exporting or foreign-owned firms tend to have relatively high productivity levels, so that faster MFP growth in these firms increases the average “distance to frontier” for other firms in the industry.
Publications
Filter publications by topic.
17 October 2023
3 July 2023
30 June 2023
30 June 2023
1 May 2023
30 March 2023
28 February 2023
28 February 2023
27 February 2023
27 February 2023
20 February 2023
23 December 2022
21 December 2022
15 November 2022
29 September 2022
1 September 2022
18 July 2022
30 June 2022
9 June 2022
31 May 2022
28 May 2022
28 May 2022
1 April 2022
15 December 2021
1 December 2021
14 November 2021
8 November 2021
8 November 2021
8 November 2021
8 November 2021
27 September 2021
1 September 2021
19 July 2021
1 July 2021
27 May 2021
21 April 2021
21 April 2021
20 April 2021
20 April 2021
1 April 2021
25 February 2021
4 December 2020
30 November 2020
4 September 2020
31 August 2020
30 June 2020
30 June 2020
28 April 2020
18 March 2020
9 March 2020
19 February 2020
16 December 2019
1 December 2019
30 November 2019
16 October 2019
16 August 2019
7 June 2019
1 June 2019
16 May 2019
15 May 2019
1 March 2019
14 February 2019
1 February 2019
1 February 2019
24 December 2018
14 November 2018
1 October 2018
31 August 2018
1 August 2018
20 March 2018
22 February 2018
1 December 2017
1 December 2017
23 November 2017
23 November 2017
1 November 2017
1 November 2017
29 September 2017
1 June 2017
21 March 2017
28 February 2017
20 February 2017
16 December 2016
28 November 2016
27 April 2016
12 January 2016
1 December 2015
21 October 2015
15 September 2015
29 June 2015
29 May 2015
29 May 2015
5 February 2015
21 January 2015
16 July 2014
5 June 2014
5 June 2014
1 March 2014
19 December 2013
20 September 2013
16 July 2013
13 May 2013
30 November 2012
24 April 2012
30 March 2012