The Economic Benefits of Standardisation

Lead author: Standards Australia       Year: 2012       Methodology: Econometric analysis

Publication Abstract

The imperative for sustainable economic growth has attracted an impressive body of economic research to better understand its determinants. Driving much of this research has been the neoclassical view of outputs as a function of physical and human capital as well as productivity1. The relationships between capital, labour and economic growth are typified by diminishing marginal returns, meaning that as the stocks of capital increase, the return from the deployment of that capital decreases. To counter this effect, productivity is identified as a third central contributor to economic growth. Productivity measures the technological progress of the economy and represents the efficiency with which resources are utilised. Factors such as economies of scale, exposure to competition and the diffusion of technological knowledge have been demonstrated to increase this progress and standards play a decisive role in each. At the macroeconomic level, the role of standards is four-fold and directly related to productivity. Specifically, standards protect the safety of the community; facilitate international trade; enhance the interoperability of technologies and processes; and facilitate technological change and economic development by reducing information asymmetry. However, it is also true that the inappropriate use of standards can hinder productivity through reducing choice, reducing competition and creating technical barriers to trade3. It is therefore important that the contribution of Standards to the national economy is monitored, not only to provide greater insights into the drivers of growth itself, but to provide an internationally comparable metric which estimates the influence that Standards development activities have on national economies.

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  • Publication type:

    • Member publication
  • Countries:

    • Australia