Growth Accounting and Productivity in the Norwegian

Fisheries 1961-2004

Rögnvaldur Hannesson

Norges Handelshøyskole

Bergen, Norway

Motivation

• Fish production depends on an unpriced, natural resource

• How important is the resource for productivity?– Does cpue depend on stock size?

• Are productivity gains dissipated by open access or lax management?

• Is technical progress normal in the fisheries despite small productivity gains?

0

20000

40000

60000

80000

100000

1950 1960 1970 1980 1990 2000

Fis

her

men

0

2000

4000

6000

8000

10000

12000

14000

Cat

ch v

alu

e (M

ill.

200

5-kr

on

er)

Fishermen Catch value

Norway’s fisheries 1950 - 2005

0

50

100

150

200

250

1961

1965

1969

1973

1977

1981

1985

1989

1993

1997

2001

Capital

Labor

Catches

Stocks

Not so evident what explains changes inproduction

Index of fish stock abundance, using sharein landed alue 1986-2004 as weights:• ”New” stocks appeared over time,representing additions to resource base

0

50

100

150

200

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

Resource base fluctuates, but was about the same in 2004 as in 1961

Thick line: average

, , ,t it it it it iti

V PY K L S t /i i

it iti

it iti

dP dYY P

dV dt dt dtV P Y

i it i it i it iititit

i it it iti

it it it iti i

Y dK Y dL Y dS YdY PPK dt L dt S dt tdt

P Y P Y

it i it i it i itiitit

i it it iti

it it it iti i

dY Y dK Y dL Y dSY PPdt K dt L dt S dtt

P Y P Y

Total factor (3-factor) productivity

Profit maximization under competition: valueof marginal productivity = factor prices

1itit it

it

YP k R

K

1it

it itit

YP k W

L

k cost of intermediateinputs, equal for all stocks

1

ln ln

it it itit t titit t ti iti

it it it it t it iti i i

it i itit

i itKt t Lt t

it iti

dY Y dSY dK dLPP R Wdt S dtt dt dtP Y P Y k P Y

dY Y dSP

dt S dts d K s d L

P Y

s’s: shares of labor and capital in value added

, , bY F K L t SlnY dS d S

bYS dt dt

ln ln ln ln lnit it it t tit it it i Kt Lt

i i i

Y d Y d S d K d Ls s s b s s

t dt dt dt dt

Change in 3-factor productivity:

lnln 3 ln 2 itit i

i

d Sd TFP d TFPs b

dt dt dt

Some of the apparent change in 2-factorproductivity due to changes in stocks?

si share of stock i in value of landings

0

1000

2000

3000

4000

5000

6000

1963

1966

1969

1972

1975

1978

1981

'000

200

0-kr

on

er

Labor Capital

0

1000

2000

3000

4000

5000

1991

1993

1995

1997

1999

2001

'000

200

0-kr

on

er

Labor Capital

Share of labor and capital in value added

0

0.2

0.4

0.6

0.8

1

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

Labor Capital

Share of labor and capital in value added

0

0.2

0.4

0.6

0.8

1

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Labor Capital

High variability of K and L shares. Capital remuneration imputed;variations in landings value absorbed by labour.Use fixed weights for labor (0.7) and capital (0.3)

What about b in Sb?

Three cases:(i)b = 1 (the Schaefer funtion)(ii)b = 0.5(iii)b = 1 (bottom-dwelling stocks) & 0.1

(stocks near surface)

Changes in productvityAnnualized change in TFP2: 0.8%

0 01

1 1T

T

T tt

TFP TFP g TFP g

-0.3-0.2-0.1

00.10.20.30.40.50.60.7

19

61

19

64

19

67

19

70

19

73

19

76

19

79

19

82

19

85

19

88

19

91

19

94

19

97

20

00

20

03

TPF2

TPF3

Growth in TFP3:Annualized growth:

4.3% (b = 1)1.7% (b = 1 or 0.1)

-0.4-0.3-0.2-0.1

00.10.20.30.40.50.6

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

b = 1

b = 0.5

b = 1 or 0.1

TFP has grown faster if the influence of stocks is accounted for (2-4% per year)TFP growth in the market-oriented sectorof the Norwegian economy 1970-2003: 2.1% per year

a) b = 1b) b = 0.5c) b = 1 or 0.1

0

100

200

300

400

500

600

700

8001

96

1

19

65

19

69

19

73

19

77

19

81

19

85

19

89

19

93

19

97

20

01

TFP2

TFP3a

TFP3b

TFP3c