Sören Wibe

Is Post-War Economic Growth Exponential?

In this article, we argue that there are strong reasons for using linear instead of exponential models when analysing post-war economic growth. Incorrect model specifications will lead to misinterpretations of the underlying economic reality and to erroneous economic forecasts. Our argument is based on an empirical investigation of real GDP per capita growth in 25 OECD countries (and three country aggregates) during the post-war period using the Box-Cox transformation method. The conclusion is that per capita growth is generally (more or less) linear (and definitely not exponential) for the level of economic development represented by these countries. Based on this we argue that analyses of growth should use linear instead of exponential models. This change of model could give new insights into problems connected with economic growth.

Energy conservation: An elasticity of substitution approach

Abstract Long-term forecasts of demand, used in energy planning, are based on assumptions alleged to be reasonable at the time of projections. The political debate can then focus on whether these assumptions are indeed reasonable. Common considers two sets of projections, and estimates the implicit price and income elasticities, thereby translating assumptions entailed in two different reports into concepts which are directly comparable. It is argued here that this approach need be taken a step further and elasticities of substitution between energy and other inputs should be calculated. Possibilities of energy conservation could then be taken into account.

A model for bounded technological progress

Abstract This paper presents a simple model capable of handling empirical cases where technology is bounded. The theoretical model is illustrated using empirical data from the Swedish pulp industry, 1937–;78.

Firm and industry cost functions for the control of emissions

Abstract The relation between firm (micro) and industry (macro) cost functions for the control of emissions are analyzed in this paper. Using aggregation methods found in modern production theory, it is demonstrated how industry cost functions can be constructed from firm functions. The model is illustrated with an empirical study of the Swedish Iron and Steel and Pulp and Paper industries where empirical micro functions are estimated and aggregated into macro relations. The main empirical result is that the cost of reduction at the micro level reveal strong economics of scale while the opposite is true at the macro level. The elasticity of cost with respect to reduced emissions varies (at the macro level) is around 1.5, indicating that a 1% increase in emission reduction increases cost with about 1.5%.

A production function for the Swedish pig iron industry

Abstract From the 1960s onwards production of pig iron has been steadily going up in Japan, and in the 1970s South Korea undertook a major programme of pig iron production. In the Western countries, production rose somewhat in the 1960s, but declined or remained constant in the 1970s. Against this background, we have looked at data for the Swedish industry for the period 1960–1975 searching for some clues. During this period, the majority of plants in Sweden enjoyed a rate of return on capital of 12% on average. For most firms this rate has declined over time, and in three of the plants the marginal productivity of capital went below zero. The marginal productivity of variable facytrs has held its own, perhaps reflecting better work practices.

Editorial Environmental regulations in the Swedish forest industry. What is the real problem

Summary The Swedish forest industry faces many regulations. In many cases they are used to eliminate, or diminish, negative external effects on the environment. The aims of most regulations are well accepted among decisions makers in the industry and in society. However, in many cases the implementation can present problems, the reason being bureaucracy. The Ortviken paper mill is located just north of Sundsvall, which is a middle-sized town in the northern part of Sweden. SCA, one of the worlds largest forest companies, owns and operates the mill. In the beginning of the 1990s, Ortviken planned for an expansion, which was considered necessary for the companys strategy and potentially profitable. But in order to build a larger plant, SCA first needed a licence from the local authorities which showed that conditions laid down in the Law of Planning and Building were met. After that, the project needed approval by the environmental authorities according to their specific laws and requirements. SCA finally succeeded in getting all the permissions needed. But the whole process took more than 10 years, despite the fact that it was carried out in close co-operation with the local authorities. While waiting for the final approvals, SCA applied for permission to expand production without changing the present emission levels. The existing permit also included a ceiling on production since emissions usually are proportional to production. However, in this case SCA wanted to increase production by only 5 %, and emissions would not exceed allowed levels. But the application was refused. The company was not allowed to increase production above the existing ceiling without a completely new application to the environmental board. The processing time for such an application would cover about two years and cost an unknown amount of money. Recently, the same company decided to analyse the possibilities of expanding production at the Tunadal sawmill, which is located in the same area. One of the alternatives was to build a completely new mill with new technology at a new and suitable site. However, a pilot study showed that the handling time just for the local planning process would be seven years and cost around 10-15 million SEK (approximately 1.5 million Euro). In addition, two years would be required for the environmental approval, so that the whole process from planning to actual start of the investment would require about 10 years. These long handling periods are of course an effective obstacle to investment. No board of directors dares to decide on an investment costing hundreds of millions of Euro if the time span of uncertainty from decision to actual start of the factory is 10-15 years. Not only has the time span necessary to fulfil the new requirements caused problems. An enormous amount of detail is needed to fulfil the requirements of an environmental impact assessment for an investment. For instance, a temporary pile of soil requires a separate analysis of the consequences for the environment, and companies are required to specify the kind of fuel used in trucks that (an unspecified number of years ahead) will drive the garbage from the building site. All these problems are particular troublesome for heavy industries like the forest industry and other industries (e. g. the steel industry and the chemical industry) that deal with material processing. What this Swedish example shows is that it is perhaps not environmental regulation per se that can make an obstacle to industrial expansion. There is no problem for the Swedish forest industry in fulfilling the technical conditions on emission levels. The crucial factor is time. The example also shows that it is not the core content of environmental regulations that is troublesome, but how these regulations are handled and formulated. It is not the environment that is the enemy, but the bureaucracy around it. Soren Wibe SLU Department of Forest Economics SE-90183 Umea Ola Carlen SLU Department of Forest Economics SE-90183 Umea

Technical Progress and Structural Change in the Swedish Pulp Industry 1920–74

Within the framework of a production function approach technical change has traditionally been studied by means of an estimated average function incorporating technical change parameters. In this study we will focus on technical change in the context of long-run structural change within an industry.

Engineering Production Functions and Technical Progress

In two trailblazing articles (1949, 1953) Hollis B. Chenery introduced the concept of ‘engineering production functions’. The articles presented an attempt to construct empirical production function ‘from engineering calculations rather, than from statistical examination of plant observations’ (1953, p. 297).