Exporting in Aust: the Productivity puzzle’s missing piece
There has been a lot of talk about productivity and how Australian fares in the productivity stakes. Source: Tim Harcourt, chief economist of Austrade.
Productivity can be increased by improvements in technology (which raises total factor productivity), working harder or working smarter (through investments in education).
Productivity improvements can potentially improve our quality of life as well as our material standard of living because if as an economy, we can produce more for every hour that we work, we can for instance; make the choice to spend more leisure time with the family.
Furthermore, as a proportion of
Of course, one way
The Nottingham studies examined mature economies like the
These improvements helped raise productivity all round in each nation’s economy. For example, in the
Now here’s the good news - there’s some new evidence that this is happening in
As a result, they became more innovative (‘learning by doing’ and eventually more productive. This also meant that they could pay higher wages and provide better working conditions to their employees. According to Melbourne Institute research, there is evidence not only of self-selection (that is better firms go into exporting in the first place) but also ‘learning by doing’ as a result of becoming exporters.
The Melbourne Institute looked at manufacturing firms in Australia between 1994 and 2000, and found that higher export intensity and a longer period of export exposure is associated with a higher level of productivity.
So exporting is good for the firms themselves, good for the workers, and via ‘learning by doing’ productivity gains – good for the rest of us too. The productivity gains by exporters ultimately provide better living standards and the chance to improve our quality of life.
Accordingly, Austrade is doing its bit to get more companies to export and to keep them exporting – and to widen and deepen the ‘global engagement’ of Australian enterprises. This will have widespread benefits as exporting (and importing for that matter) may well be the missing piece of the productivity puzzle.
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