Productivity Data
The table above shows the line graph representation of the two types of New Zealand’s productivity data. Specifically, it shows labour and capital productivity levels from the year 1996 to 2015, a 20 year period. Labour productivity is represented by the blue line while capital productivity is represented by the red line. Each drop down line represents a point in the 20 year timeline that was selected. In order to get the most out of this graphical presentation, one has to understand what labour and capital productivity means. Labour productivity is a measure or function of economic growth that focuses on labour, specifically on the amount and or value of goods and services produced by a single unit of labour. Labour units, in most economic models, are represented by a single hour. A higher level of labour productivity is generally seen as a positive thing because it means that the country’s labour force are stimulating economic growth by efficiently producing goods and services. Capital productivity is also evaluated in the same manner; i.e. the higher the better. It measures the value or amount, in terms of economic output, a certain unit of capital creates. In a more realistic sense, capital productivity evaluates how well the different entities in the country’s economy are spending their capital, composed mostly of financial resources.
Ideally, capital spending or expenditures should create jobs and other economically stimulating activities. That ideal scenario can be manifested by a heightened level of capital productivity. In the case of New Zealand for the time frame selected, a divergence in the relationship between labour and capital productivity can be seen whereas labour productivity can be seen to be trending upwards while capital productivity can be seen to be trending sideways or downwards. The divergence of the measures of these two variables is evident. This can be happening for various reasons. For labour productivity, one possible reason why it has been consistently higher for the past twenty years is the disruption caused by technology. As newer and more sophisticated technologies get introduced, an average worker who spent an hour in his current average job would have created more output than someone who works in the same position ten or twenty years ago and. The difference can be attributed to technology. Capital productivity, on the other hand, may be on a downtrend because of inability to exercise sound fiscal management, not only among the different agencies of the government but among members of the private sector as well.
Technology Growth
The bar graph above shows the cycle of progression and regression of New Zealand in terms of technology growth. Technology growth can be obtained by adding labour input growth and capital input growth and subtracting their sum from the growth in output or simply the GDP of the country. For the most part in the past twenty years since 1997, New Zealand’s technology output growth rate has been positive. The highest growth in technology-attributed output was seen in 2000 when it hit nearly five per cent. The lowest growth in technology-attributed output was seen in 2013 when it hit nearly negative four per cent. The data does show that Ag is rising during the end of the period starting from 2011 and then progressing further in 2012 and then onwards.
The figure above is a Scatter Plot Diagram of Yg and Ag with Yg in the X axis and Ag in the Y Axis. The trend line shows that the two variables are actually positively correlated. This means that based on graphical and numerical observation available in the past twenty years, the collective rise in Yg has been reciprocated with a collective rise in Ag. This is only expected because Ag represents technology-attributed output which is still part of the total economic output which is Yg or the GDP . The higher and more efficient the level of technology in a country is, it would, in theory, have a greater boost in GDP or economic output growth. This is what exactly happened in New Zealand. Because of the significant growth of its technology output, its GDP or total economic output got positively influenced. That relationship is supported by the upward trend line that was established.
Labour Volume and Output Measure GDP
Labour Volume – Weekly Hours Paid versus Output Measure GDP – Measured Sector
The two tables above show the Labour Volume and Output Measure in terms of GDP. The first table only shows the labour volume weekly hours paid. Based on that first table, it can be said that an in the past twenty years since 1996, an average Kiwi is now working a slightly higher number of hours per week compared to an average Kiwi worker living in 1996. This is manifested by a collectively upward movement of the blue dotted line.
As for the second table, the data from table one was simply paired with another set of data which is Output Measure GDP for the same time frame, 1996 to 2015. It is conclusive that an average Kiwi’s earning has also been up since 1996. Comparing the two, Output Measure GDP has not only kept up but even exceeded the increase in labour volume that happened in that same period. This means that an average Kiwi today may be working for more hours per week but he has turned in more output for his hours spent on the job compared to someone working 1996.
References
Mankiw, G., Bandyopadhyay, D., & Wooding, P. (2009). Principles of Macroeconomics in New Zealand. Cengage Brain, 01-16.
