2.1.3. Material Productivity (MP)

MP is defined as the desirable output per intermediate input (e.g., natural resources). MP can be increased by reducing the intermediate input while maintaining the same amount of production or by increasing the production amount with the same intermediate input. Therefore, MP reflects the efficiency of intermediate input utilization [23]. Thus, in addition to LP and CP, MP is an important indicator for evaluating the energy sector from the resource efficiency perspective.

Notably, the definition of the material is often different between the economics and engineering research fields. Baptist and Hepburn [28] explain that engineers tend to define materials to mean physical inputs (e.g., iron ore), while economists often do not differentiate between materials and other intermediate inputs because it can be difficult to distinguish raw materials. Because of the data constraints on identifying raw materials, this study evaluates MP using monetary-based intermediate input data, following the idea in the economics research field. In this study, MP is estimated by gross output divided by intermediate material cost.

This study assumes that the IT and software capital contribute to increasing MP due to the automated control of resource inputs in the production process. Additionally, sensing technology can reduce the risk of resource waste, such as leakages of electricity and gas.
