An analysis of technical efficiency and productivity growth in the Pacific Northwest sawmill industry

The objective of this project was to investigate technical efficiency and productivity growth in the Pacific Northwest sawmilling industry over the period 1968-2002. Productivity growth was decomposed into three components: technical change, efficiency change, and scale efficiency change. In addition, using econometric methods, changes in output elasticities and input substitution elasticities were examined.; Chapter 2. In an analysis of the Washington state sawmilling industry, data envelopment analysis (DEA) was employed to examine the technical and scale efficiency of the sawmill industry. Technical efficiency was found to vary on both a regional and temporal basis. For most years the industry (in aggregate) operated at a point of modest scale inefficiency. The industry's rates of productivity growth and technical change were examined using the Malmquist input-oriented productivity index. The results of this analysis indicate that the industry experienced modest average annual declines in productivity and technical change during the 1970s, but experienced strong productivity growth and technical change during the 1980s and 1990s.; Chapter 3. In an analysis of the Oregon and Washington sawmilling industry, stochastic frontier analysis (SFA) was employed to examine productivity growth and the components of productivity growth: technical change, efficiency change, and scale efficiency change. The results of this analysis indicate that productivity growth was strong over the 30-year study period. Productivity growth was found to be due almost exclusively to technical progress. Efficiency change was found to be very small and negative throughout the study period and scale efficiency change was found to be very small, but positive during the 1990s and zero in earlier years. Morishima input substitution elasticities, were found to vary over the study period.; Chapter 4. In an analysis of the Oregon and Washington sawmilling industry, technical and scale efficiency were examined using data envelopment analysis (DEA). Productivity growth and its decomposition were also examined using the Malmquist productivity index. Following the methods described by Simar and Wilson (1998, 1999, 2000a, 2000b, 2002), the smoothed bootstrap technique was used to construct confidence intervals for the technical efficiencies and Malmquist productivity indices. The results of this study were compared to the results obtained in Chapter 3. Consistency was found between the results of Chapters 3 and 4 with respect to the direction of productivity growth and technical and efficiency change. However, the two methods differed considerably in their estimates of the rates of productivity growth and technical change. The results of both chapters indicate that productivity growth in the Northwest sawmilling industry was driven primarily by technical progress.