This paper analyzes productivity growth in seventeen OECD countries over the period 1979-88. A nonparametric programming method (activity analysis) is used to compute Malmquist productivity indexes. These are decomposed into two component measures, namely, technical change and efficiency change. The authors find that U.S. productivity growth is slightly higher than average, all of which is due to technical change. Japan's productivity growth is the highest in the sample with almost half due to efficiency change. Copyright 1994 by American Economic Association.

Productivity growth, technical progress and efficiency change in industrial countries

The economic theory of index numbers and the measurement of input, output, and productivity

This paper analyzes productivity growth in 17 OECD countries over the period 1979-1988. A nonparametric programming method (activity analysis) is used to compute Malmquist productivity indexes. These are decomposed into two component measures, namely, technical change and efficiency change. We find that U.S. productivity growth is slightly higher than average, all of which is due to technical change. Japan's productivity growth is the highest in the sample, with almost half due to efficiency change. (JEL C43, D24) In this paper we apply recently developed

Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries

We describe the theory and practice of real GDP comparisons across countries and over time. Effective with version 8, the Penn World Table (PWT) will be taken over by the University of California, Davis and the University of Groningen, with continued input from Alan Heston at the University of Pennsylvania. Version 8 will expand on previous versions of PWT in three respects. First, it will distinguish real GDP on the expenditure side from real GDP on the output side, which differ by the terms of trade faced by countries. Second, it will distinguish growth rates of GDP based on national accounts data from growth rates that are benchmarked in multiple years to cross-country price data. Third, data on capital stocks will be reintroduced. Some illustrative results from PWT version 8 are discussed, including new results that show how the Penn effect is not emergent but a stable relationship over time.

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Online Appendix to: The Next Generation of the Penn World Table*

Economists have shown that large and persistent differences in productivity levels across businesses are ubiquitous. This finding has shaped research agendas in a number of fields, including (but not limited to) macroeconomics, industrial organization, labor, and trade. This paper surveys and evaluates recent empirical work addressing the question of why businesses differ in their measured productivity levels. The causes are manifold, and differ depending on the particular setting. They include elements sourced in production practices -- and therefore over which producers have some direct control, at least in theory -- as well as from producers' external operating environments. After evaluating the current state of knowledge, I lay out what I see are the major questions that research in the area should address going forward. (JEL D24, G31, L11, M10, O30, O47)

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What Determines Productivity

Early in this century economists began to give serious attention to making comparisons using index number techniques. There was extensive debate as to which index number formulas were the most appropriate for carrying out comparisons.1 The debate was extensive in no small part due to the lack of agreement as to criteria for preferring one formula over another. In recent decades there has been a resurgence of interest in index numbers, resulting from discoveries that the properties of index numbers can be directly related to the properties of the underlying aggregator functions that they represent. The underlying functions - production functions, utility functions, etc. - are the building blocks of economic theory, and the study of relationships between these functions and index number formulas has been referred to by Samuelson and Swamy (I974) as the economic theory of index numbers.2 A key development in the economic theory of index numbers has been the demonstration that numerous index number formulas can be explicitly derived from particular aggregator functions. This development provides a powerful new basis for selecting an index number procedure. Rather than starting the selection process with a number of plausible index number formulas, one can specify an aggregator function with desirable properties and derive the corresponding index number procedure. The resulting index is termed exact for that particular aggregator function. Diewert (I976) makes a strong case for limiting the consideration of aggregator functions to those which are flexible, i.e. those which can provide a second order approximation to an arbitrary aggregator function. He has termed index numbers that are exact for flexible aggregator functions 'superlative '. There are two superlative index numbers that are of particular interest - the Fisher Ideal index and the Tornqvist-Theil-translog index. Fisher (I 922) dubbed the following index Ideal since it best satisfied his several criteria for choosing among index numbers:

Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers

Productivity growth, scale economies, and capacity utilization in US railroads, 1955-74.

The efficiency of public and private firms is usually compared in industries which have heavy regulation and limited competition. In this paper we present a case study in which the effects of property rights can be isolated from the effects of regulation on noncompetitive markets. We compare the postwar productivity performance of the Canadian National and Canadian Pacific Railroads. Contrary to the predictions of the property rights literature, we find no evidence of inferior performance by the government-owned railroad. We conclude that any tendency toward inefficiency resulting from public ownership has been overcome by the benefits of competition.

Douglas W. Caves

Papers

The economic theory of index numbers and the measurement of input, output, and productivity

Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers

Productivity growth, scale economies, and capacity utilization in US railroads, 1955-74.

The Relative Efficiency of Public and Private Firms in a Competitive Environment: The Case of Canadian Railroads

Flexible Cost Functions for Multiproduct Firms