Productivity development in Icelandic, Norwegian and Swedish fisheries

Abstract

This article analyses the Total Factor Productivity (TFP) performance of fisheries in Iceland, Norway and Sweden during the period 1973 to 2003. We measure TFP growth using real gross value added as output and capital input, labour input and a stock input index based on the major fish stocks. In developed neighbouring countries, we expect rapid diffusion of fishing technology innovations contributing to productivity convergence. In addition, innovations in the public regulation and the industrial organization may also have influenced productivity growth during the period. We find that Iceland had the highest annual TFP growth. Accounting for stock changes, it amounts to 3%, while the corresponding figures for Sweden and Norway are 2.8% and 0.8%, respectively. Despite best practice fishing technologies being widely available, we find no evidence of productivity convergence among the three countries.

Keywords:

• fisheries
• growth accounting
• natural resources
• total factor productivity

JEL Classification:

• D24
• O47
• Q22

Acknowledgements

Thanks to Bengt Sjöstrand, Institute of Marine Research, Sweden, for help with stocks and landings. Advice on Icelandic data from Sveinn Agnarsson, University of Iceland, is gratefully acknowledged. Financial support from The Nordic Working Group on Fishery Research, The Adlerbert Research Foundation and support from Sida to the Environmental Economics Unit at University of Gothenburg is acknowledged.

Notes

¹ Capture fisheries, in this article, refer to commercial catching of fish living and growing in the sea without any control of the growth stages of the species (in aquaculture all stages are controlled but in between cases exist, but are not relevant for our study).

² These differences can only partly be explained by differences among the countries in terms of labour productivity in the general economy, where Norway has higher and Sweden lower labour productivity than Iceland. A higher capital-labour ratio in Iceland than in both Norway and Sweden can also explain the differences to some extent.

³ More general functional forms like the translog or a Constant Elasticity of Substitution (CES) production function would call for more details in the data.To study productivity differences using the CES production function requires that the elasticity of substitution between factors can vary across countries and perhaps even over time and using the translog would ask for a test whether coefficients on labor and capital are equal across countries (Bernard and Jones, 1996a). The same applies for a Harrod neutral instead of a Hicks neutral productivity measure and due to data limitations, we use the outlined standard approach (for an extensive discussion, see also Hulten, 2000). An area for future research could be to explore nonneutral technical change, which often has been documented in production frontier studies (e.g. Battese and Broca, 1997).

⁴ Both the Tornqvist-based TFP and the gross value added approach entail potential biases if intermediate inputs are not constant in share of inputs and outputs. Given our crude measures of labour and capital, which do not adjust for any change in intermediate input use, we prefer the gross value approach as it adjusts for changing intermediate input share of the output value.

⁵ During the 1990s, Swedish fishermen had income substantially lower than unskilled labour in the manufacturing sector (Stigberg, 1997; Eggert and Ulmestrand, 1999), while Icelandic fishermen were highly paid (Danielsson, 1997). Norwegian fishermen on average had wages at pair with wages in other sectors (Hannesson, 2007a), but wages vary substantially between groups of fishermen. Hannesson (1985) found that small scale fishermen in the North and the West of Norway earned substantially lower wages than those in large scale trawl and purse seine fisheries.

⁶ When we exclude fish stock input, annual TFP growth rates are 1.6%, 0.9% and 0.3% for Iceland, Norway and Sweden, respectively. See Appendix B for more information on this.

⁷ Sweden introduced ITQs for its pelagic fleet in 2009.