The importance of frontier firms in total factor productivity in New Zealand, 2001-2016

Harris, R.I.D.

Abstract

Using firm-level panel data and estimating production functions for 37 industries, covering the 2001–16 period, this paper finds little evidence of major changes in frontier TFP over 2001–16, and limited evidence of catching-up; that is, it seems very likely that New Zealand firms at the national frontier are not keeping pace with global frontier firms. The most important conclusion from this study is that while there is some evidence of a failure of productivity-enhancing technologies to diffuse from firms operating at the national productivity frontier, the major problem is failure of productivity-enhancing technologies to diffuse from firms operating at the global productivity frontier. New Zealand’s major problem is that frontier firms are underperforming because of their characteristics (e.g. small and lacking international connections) while productivity is overall adversely affected by a lack of competition, which generally creates barriers to exiting and insufficient reallocation of market shares from lower- to higher-productivity firms.

Citation

Harris, R. (2020). The importance of frontier firms in total factor productivity in New Zealand, 2001-2016. New Zealand Economic Papers, 54(3), 285-311. https://doi.org/10.1080/00779954.2020.1806339

• Journal Article Type: Article
• Acceptance Date: Jul 26, 2020
• Online Publication Date: Aug 18, 2020
• Publication Date: 2020
• Deposit Date: Jul 27, 2020
• Publicly Available Date: Feb 18, 2022
• Journal: New Zealand Economic Papers
• Print ISSN: 0077-9954
• Electronic ISSN: 1943-4863
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 54
• Issue: 3
• Pages: 285-311
• DOI: https://doi.org/10.1080/00779954.2020.1806339
• Public URL: https://durham-repository.worktribe.com/output/1259791