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Comparative analysis of the production technologies of logging, sawmill, pulp and paper, and veneer and plywood industries in Ontario

Authors :
Shahi, Chander
Upadhyay, Thakur Prasad
Pulkki, Reino
Leitch, Mathew
Source :
Canadian Journal of Forest Research. March, 2011, Vol. 41 Issue 3, p621, 11 p.
Publication Year :
2011

Abstract

Technological growth in production and efficient utilization of input factors are the two biggest contributors to total factor productivity (TFP). TFP of the four major forest industries (logging, pulp and paper, sawmill, and veneer and plywood industries) of Ontario are compared by analyzing their production structures using duality theory in production and costs. The study uses annual data of output and four inputs--labour, capital, energy and materials--from 1967 to 2003. Different restrictions on the translog cost function are applied to each industry to determine the cost function that best describes each industry's technology, which is further used to estimate Morishima elasticities of substitution, ownprice and cross-price elasticities, rate of technological change, and TFP. The production structure of sawmill and veneer and plywood industries is found to be linear homogeneous and homothetic, and that of logging and pulp and paper industries is non-homothetic. Further, Hicks neutral technological change for all four industries is rejected, indicating that the production structure in all four industries is biased in favour of certain inputs and against others. This suggests that policies that improve the efficiency of each industry should focus on input-saving factors of that industry, thereby improving its competitive position. Resume: Le progres technologique dans la production et l'utilisation efficace des intrants sont les deux elements qui contribuent le plus a la productivite globale des facteurs (PGF). La PGF de quatre grandes industries forestieres (exploitation forestiere, pates et papiers, sciage ainsi que placages et contreplaques) de l'Ontario est comparee en analysant leur structure de production et en utilisant la theorie de la dualite dans la production et les couts. L'etude utilise les donnees annuelles de production et de quatre intrants--la main-d'oeuvre, le capital, l'energie et les matieres premieres--de 1967 a 2003. La fonction de cout translog de chaque industrie est restreinte de differentes facons afin de determiner la fonction de cout qui decrit le mieux la technologie de chaque industrie. Cette fonction est ensuite utilisee pour evaluer les elasticite s de substitution de Morishima, les elasticites-prix et les elasticites-prix croises, le taux de changement technologique et la PGF. Les structures de production de l'industrie du sciage et de l'industrie des placages et contreplaques sont lineaires homogenes et homothetiques alors que celles de l'industrie de l'exploitation forestiere et de l'industrie des pates et papiers ne sont pas homothetiques. De plus, il n'y a pas de progres technique neutre au sens de Hicks dans les quatre industries, indiquant que leur structure de production favorise certains inputs et en neglige d'autres. Ces resultats indiquent que les politiques visant a ameliorer l'efficacite de chaque industrie devraient se concentrer sur les mesures d'economie specifiques aux intrants que privilegie chaque industrie et ainsi ameliorer leur position concurrentielle. [Traduit par la Redaction]<br />Introduction With over 72 million hectares of forest land, representing 16% of Canada's total estimated forests, the province of Ontario is a critical contributor to Canada's forest products industries (Ontario [...]

Details

Language :
English
ISSN :
00455067
Volume :
41
Issue :
3
Database :
Gale General OneFile
Journal :
Canadian Journal of Forest Research
Publication Type :
Academic Journal
Accession number :
edsgcl.251955125
Full Text :
https://doi.org/10.1139/X10-231