Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 301: Patterns of Productivity Growth in the Norwegian Salmon Farming Industry

Ragnar Tveterås () and Almas Heshmati ()
Additional contact information
Ragnar Tveterås: Department of Business Administration, Postal: Stavanger College & Foundation for Research in Economics and Business Administration, P.O. Box 2557 Ullandhaug, N-4004 Stavanger, NORWAY
Almas Heshmati: Dept. of Economic Statistics, Stockholm School of Economics, Postal: P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: This paper is concerned with empirical measurement of patterns of productivity growth by means of competing panel data models of technical change. We argue that short term analysis must rely on models of technical change which are more flexible than the standard time trend model, because biophysical shocks and shifting market conditions lead to shifts in the rate of technical change from year to year. Based on empirical results from an unbalanced panel of 560 Norwegian salmon farms for the period 1985-93 we also find that flexible models of technical change are the most appropriate for short term analysis of productivity growth. Our results indicate that market conditions may be as important as biophysical shocks, such as disease outbreaks and weather shocks, for the estimated rates of productivity growth. Contrary to standard hypotheses in the literature we find a negative relationship between industry price-cost margin and productivity growth, probably due to a reduced level of on-farm innovation and less investments in improved technologies under depressed economic conditions.

Keywords: Firm-specific technical change; productivity growth; market conditions; salmon farming

JEL-codes: C23; C51; D24; Q12; Q22

25 pages, February 9, 1999

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