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Methodology and interpretation
The primary aim of productivity analysis is to understand the drivers of growth in output. Growth in output can occur from the application of more inputs, by utilising inputs more efficiently or from a combination of both. At a basic level, productivity growth occurs when the volume of output rises faster than the volume of inputs, but beyond this simple notion a range of conceptual and measurement issues arise. In the first instance, productivity growth can be defined in relation to a single input (for example, labour) or to a combination of inputs (for example, labour and capital). Also, output growth might be defined in relation to total sales or it might be defined as growth in value added, that is, output less intermediate costs. This section outlines the measurement choices made in the compilation of the current round of industry MFP estimates.
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