Microeconomic reforms and the revival in Australia’s growth in.pdf

Microeconomic reforms and the revival in Australia’s growth in productivity and living standards Dean Parham∗ Assistant Commissioner Productivity Commission, Canberra Paper presented to the Conference of Economists, Adelaide, 1 October 2002 Session on Microeconomic Reform Revisited Abstract Microeconomic reforms were introduced from the mid-1980s to stem the slippage in growth in Australia’s productivity and living standards. Productivity growth more than doubled in the 1990s to reach a record high. A range of possible explanations for the productivity surge are examined in the paper. The three most plausible are microeconomic reforms; education and skills in the workforce; and the rapid uptake and smart use of information and communications technologies. To a certain extent, these three factors have interacted. The surge in productivity growth has underpinned growth in average incomes that is strong by both historical and international standards. ∗ Paul Roberts assisted with the preparation of this paper. Helpful comments on a previous draft were received from Productivity Commission colleagues and from Charlie Aspden of the ABS. The views expressed are those of the author and do not necessarily reflect the views of the Productivity Commission. Author’s email: dparham@.au. Microeconomic reforms and the revival in Australia’s growth in productivity and living standards 1. Introduction Raising Australia’s growth in productivity has been a principal aim of policy reform. And Australia has experienced a productivity resurgence since the early 1990s. But that change in productivity tr