An analyseis of productivity growth in the construction industry: A non-parametric approach

Abstract

This study analyses the growth of technical efficiency in the different sub-sectors of Hong Kong's construction industry during 1981-2002 using a Malmquist's non-parametric approach. Production data needed for the analysis were purchased from the Census and Statistics Department of the Government of the Hong Kong Special Administrative Region. The Malmquist's non-parametric approach can be used to measure total factor productivity growth and segregate it into technological change (shift in the production frontier) and efficiency change (catching-up to the production frontier). Technological change is a result of use of new production technologies while efficiency change is a result of adoption of known technologies within the industry. Such segregation allows use to examine the nature and characteristics of growth in total factor productivity in the construction industry. The construction industry is not a homogeneous industry but with firms specialized in different operations. Construction firms in different sub-sectors have different characteristics and thus are likely to experience different rates of productivity growth, technological change and efficiency change. The study attempts to explain the sectoral variations in the rates of productivity growth, technological change and efficiency change of technological progress with observation production characteristics. The results will have important policy and practical implications for sustaining productivity growth in the construction industry.