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1370.0 - Measures of Australia's Progress, 2010  
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Productivity

PRODUCTIVITY GLOSSARY

Gross Domestic Product (GDP)

The total market value of goods and services produced in Australia within a given period after deducting the cost of goods and services used up in the process of production but before deducting allowances for the consumption of fixed capital. Thus gross domestic product, as here defined, is 'at market prices'. It is equivalent to gross national expenditure plus exports of goods and services less imports of goods and services.

Innovation

Innovation refers to the implementation of any new or significantly improved goods or services; method of producing or delivering goods or services; strategies, structures or routines of a business which aim to improve performance; or design, packaging or sales methods aimed to increase the appeal of goods or services.

Labour productivity

Labour productivity estimates are indexes of real GDP per hour worked. They indicate the volume of output produced per hour of labour expended in production. Labour productivity indexes reflect not only the contribution of labour to changes in product per labour unit, but are also influenced by the contribution of capital and other factors affecting production.

Multifactor productivity

Multifactor productivity (MFP) is the part of output growth that cannot be attributed to the growth of labour or capital inputs. MFP reflects such things as business process innovations, advances in technology, or almost any other type of improvement in the efficiency of a firm's operations. When MFP rises, the economy can produce more output with the same quantity of labour and capital. MFP can be equated with technological change if certain conditions are met (e.g. firms seek to maximise profits, markets are competitive, and the coverage of inputs is complete). Because these conditions are typically not met, measured MFP will, in addition to technological change, include the effects of model misspecification and errors in the measurement of the variables.

OECD

Organisation for Economic Co-operation and Development.

Output

Output consists of those goods and services that are produced within an establishment that become available for use outside that establishment, plus any goods and services produced for own final use.

Productivity growth cycle

A common method of examining changes in productivity over an extended period involves identifying and dividing the data into productivity 'growth cycles'. Year to year changes in measured productivity may reflect changes that are conceptually distinct from the notion of productivity. By analysing averages of productivity statistics between growth cycle peaks, the effects of some of these temporary influences can be minimised, allowing better analysis of the drivers of productivity growth in different periods. Productivity growth cycle peaks are determined by comparing the annual MFP estimates with their corresponding long-term trend estimates. The peak deviations between these two series are the primary indicators of a growth-cycle peak, although general economic conditions at the time are also considered.

Quality adjusted labour productivity

This measure of labour productivity is an index of real GDP per hour worked adjusted for changes in the aggregate quality of labour. Changes in the quality of labour may be due to factors such as changes in educational attainment and the length of experience in the workforce.

Research and development

Research and development (R&D), as collected by the Australian Bureau of Statistics (ABS), is defined in accordance with the OECD standard as "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications". Although outside the economic boundary of R&D as defined by the OECD, R&D performed overseas by Australian organisations is included in the data presented.

Web presence

Web presence includes a web site, home page or presence on another entity's web site. A web site or home page is an electronic document that is accessed via a unique address on the World Wide Web. The document provides information in a textual, graphical or multimedia format. Web presence excludes online listings.

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