1 / 65

Measuring Output and Productivity Growth in Services

Measuring Output and Productivity Growth in Services. Joint product of NESDB and World Bank Work being down by by a team from the National Accounts Office. Reasons for Current Interest. Services are a major source of employment growth Important part of economic infrastructure.

jamij
Download Presentation

Measuring Output and Productivity Growth in Services

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Measuring Output and Productivity Growth in Services Joint product of NESDB and World Bank Work being down by by a team from the National Accounts Office

  2. Reasons for Current Interest • Services are a major source of employment growth • Important part of economic infrastructure. • Major area of innovation (primary user of ITC capital). • General Agreement on Trade in Services (GATS) increased interest in performance of services. • Significant influence in competition for emerging business centers in global production system.

  3. Objectives • Review methodology for computing output and productivity in services. • Develop a methodology for cross-national comparisons of productivity performance in specific industries. • Airlines, Communications, Banking, and Trucking. • Valuable benchmark of performance of critical industries relative to trade partners.

  4. Problems • Statistical system collects very little information on services • Very true in Thailand • Reporting system (surveys) dominated by manufacturing and goods production • Focus on tradable goods and exports • Hard to measure real output of services • Hard to define unit of output • Lack of price indexes to adjust for inflation

  5. Construction of Growth Accounts • (1) • (2) • Where: • Q: real GDP • A: TFP – efficiency of factor usage • K: physical capital inputs -stock measure • L*: labor inputs - adjusted for yrs school • sk: factor income shares

  6. Growth Accounts (2) • Computation of factor shares • Division of value added between capital and labor compensation • Income share can be used to measure contribution in competitive situations • Mixed income (self-employment) is a combination of labor and capital income. • Assume labor component equal to wage of employees • Adjust compensation by ratio of total employment to employees. • Increases importance of labor in growth accounts

  7. Stages of Presentation • Macroeconomic Overview • Total Economy and major sectors • Agriculture, Industry, and Services • Structure of Services Sector • Industry groupings • General data issues • Detailed Industries • Productivity measures • International comparisons

  8. Macro Overview

  9. I.Macroeconomic Overview • Thailand has had a very limited recovery from 1997-98 financial crisis. • Permanent loss of output in levels context • Much slower trend growth after crisis (annual LP growth– 2.6% vs 6.8%) • Sharply lower rates of capital accumulation • Faster growth of Total Factor Productivity

  10. Sector Performance • Agriculture • Small contribution to growth • Mechanization (capital) is major source • Industry • Historically, most rapid growth • Large post-crisis decline in capital contribution • Some TFP offset • Services • Decline in capital contribution • No TFP offset

  11. Reallocation Gains • Low labor productivity and TFP growth in all three sectors • Contribution of within-sector labor productivity has declined. • Large productivity slowdown in industry and services. • Large portion of aggregate productivity growth coming from reallocation of workers from low-productivity agriculture to high-productivity industry and services.

  12. Resource Reallocations

  13. Resource Reallocations (2) • Definitions • LPv = labor productivity (value added) • L = employment • wi = value added share of industry i. • ei = employment share of industry i.

  14. II. Major Service Industries • Unlike the situation in agriculture and industry, Thailand collects very little information about the performance of services. • No comprehensive economic census. • Employment estimates are available only from the household labor force survey • Survey works well for major sectors • But, respondents do not know detailed industry classification of their employers.

  15. Labor Productivity in Service Industries • Real output measures from national accounts • Employment estimates from LFS • Trade, restaurants and transportation are largest providers of value added and employment. • Growth is mot rapid in communications, and public services. • Many industries appear to have negative productivity growth. • Implausible, and suggestive of measurement problems.

  16. Output and Labor Productivity Growth, 1993-2005

  17. Total factor productivity • Conversion of capital stock measures to new industrial classification is still incomplete • Severe problems with factor income shares • Labor share recorded as very low in industries such as wholesale and retail trade and restaurants. • TFP growth is negative in many industries

  18. Total Factor Productivity, 1993-2005

  19. Overview of Service Industries Problems • Suggestion that output and productivity growth are significantly understated in several service industries • Unresolved conflicts with other data, such as Business Trade and Service Survey of NSO • Difficult to make significant progress without expanded source data.

  20. Problems (2) • Need for a decennial census and annual surveys of service industries. • Comparable to existing data for manufacturing. • Questionnaire can be considerably shorter • Revenue, value added, and investment outlays are the critical elements. • Would provide an estimate of employment and compensation on a basis that matches that of the production data.

  21. III. Four Detailed Industries • Airlines, communications, banking, and trucking • Important components of logistics infrastructure for manufacturing and exports • Indicative of Thailand’s development as an international business center • Attempt benchmark comparisons of performance relative to trading partners.

  22. Methodology • Measure productivity as before, but need to measure output and inputs in common international units • Reluctant to use either commercial exchange rates or PPPs as they may not be representative of specific industry • Try to develop a common physical unit for output (e.g. airlines and communications) • In banking, we plan to use commercial exchange rate. • OK for labor, and much of capital is purchased in a common global market.

  23. I. Airlines • Case study of international comparison • Can define a unit of output as a ton kilometer (aggregate passenger and freight) • Avoids need to convert from one national currency to another • Data are available from individual airlines • Can basically match the data in Thailand’s national accounts.

  24. Alternative Measures of Capital Input • Net capital stock of NESDB • Cumulative of investment with assumed rate of depreciation • Issues of leasing and retirement of planes • Available capacity tons of passengers and freight • Available ton-kilometers • Number of planes aggregated by relative price.

  25. International Comparisons

  26. International Comparisons • Output is a weighted average of passengers (58%) and passenger ton-kilometers (42%) • Weights are from a regression of airline revenues as a function of passengers and passenger ton kilometers • Capital is based on available ton-kilometers

  27. Overview • Thai Air’s labor productivity is below that of the United States an Singapore • Currently offset by lower labor cost • Gap is slowly widening for both Thai Air and Malaysia Air • Capital productivity is comparable to that of Singapore Airlines • Overall TFP gains very similar for Thai and Malaysia

  28. Overview (2) • Most serious problem is a lack of any adjustment for quality. • U.S. productivity gains in recent years may have been at expense of service quality • How measure quality? • Overall performance measures may camouflage some more specific problems. • Thai Air has a high load factor on regional flights, but very low for long distances • Harder to compete outside of region.

  29. Overview (3) • Thailand has a significant labor cost advantage • Thai Air has a relatively high rate structure • Revenue per passenger kilometer

  30. 2. Communications • Industry of very rapid innovation • Mobile phones • Broadband and the internet • Increased competition • Data within Thailand are very incomplete • Grouped with postal service in national accounts • Currently relying largely on data from International Telecommunications Union

  31. Output Measurement • Three broad activities of fixed line service, mobile phones and broadband • Current information on broadband service is incomplete for many countries • Emphasize fixed line and mobile • Weigh physical indicators of output (subscribers) by share of revenue. • Extraordinarily rapid growth for Thailand.

  32. Telecommunications Output

  33. Labor Productivity • Mobile systems are much cheaper to construct than fixed line and less labor intensive. • Questions about employment data in recent years • Reported numbers are volatile and may not consistently include all of the major companies • Emergence of mobile led to very rapid rise in labor productivity • Less dramatic for the United States, which had a large investment in fixed lines.

  34. Labor Productivity

  35. Capital • National Accounts Office does not produce a measure of capital stock at level of telecommunications. • Not sure of source for report to ITU and the coverage of that data • Expect large gains in capital productivity in those countries where mobile substitutes for building a fixed line system. • In Thailand, mobile phone subscribers far outnumber fixed line subscribers (33 million versus 7 million).

  36. Capital Productivity

More Related