Australia's Declining Productivity Essay

2378 Words Feb 27th, 2016 10 Pages
EFN405
EFN405
Australia’s Declining Productivity
Nicholas Woods n9496220Tutor: Ambroise Descamps
Australia’s Declining Productivity
Nicholas Woods n9496220Tutor: Ambroise Descamps
08
Fall
08
Fall

Table of Contents 1.0 Introduction 3 2.0 Australia’s Economic Performance 3 2.1 2001-2007 Economic Performance 4 2.2 2008-2012 Performance 4 2.3 Relationship Between Economic Growth and Productivity Growth 5 3.0 Policies Used to Address Lagging Productivity Growth 7 3.1 Infrastructure 7 3.2 Regulation Reform 8 3.3 Policy Effectiveness 9 4.0 Conclusion 10 5.0 Reference List 11

1.0 Introduction
Driven by its dependence on natural resources, Australia’s economy has performed well in the aftermath of the 2007-08
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2.0 Australia’s Economic Performance
US economist Paul Krugman notes the importance of productivity due to its ability to improve a country’s living standard over time. Productivity growth can be broken down into economy-wide and industry levels. At the economic level productivity growth is achieved through maximum output per unit of input that translates into greater income levels around the country. At the industry level productivity growth allows industry to compete with others around the economy and with comparable industries around the world

2.1 2001-2007 Economic Performance

Fig. 1. Multifactor Labour Productvity, 2001-2007

Fig. 1 shows Australia’s multifactor labour productivity between 2001 and 2007. The figure shows a peak level in 2004 before regression towards 2007. Prior to the peak in 2004, Australia’s multifactor labour productivity was growing at an average of 1.57% each year between 2001 and 2004. In comparison Australia’s multifactor labour productivity after 2004 declines at and average of 0.43% each year between 2004 and 2007. Despite the GFC beginning in 2007, the declining labour productivity beginning in 2004 may be considered a key indicator of the 2007-2008 crisis.

2.2 2008-2012 Performance

Fig. 2. Multifactor Labour Productivity, 2008-2012

Fig. 2 illustrates Australia’s multifactor labour productivity between 2008 and 2012, the aftermath of the GFC. Australia’s labour productivity growth

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