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Productivity Growth in Manufacturing, 1963-85: The Roles of New Investment and Scrapping

Published online by Cambridge University Press:  26 March 2020

Nicholas Oulton
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Abstract

The twin forces of investment in new and scrapping of old equipment are traditionally supposed to play a large part in explaining productivity growth. Scrapping cannot in practice be observed directly but can be inferred by estimating a vintage capital model. When this is done it is found that these forces do indeed have a substantial role to play in explaining differences between industries in productivity growth rates in the 1960s and 1970s, but not in the 1980s. The productivity improvement observed in most industries in the 1980s must therefore be ascribed largely to forces other than new investment and scrapping.

Type
Articles
Information
National Institute Economic Review , Volume 127 , February 1989 , pp. 64 - 75
Copyright
Copyright © 1989 National Institute of Economic and Social Research

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