No. 44, Spring 2023
Articles from the current edition of the IPM can be accessed below. Access to back issues from before 2021 as well as information on submission of papers for publication in the IPM can be obtained from the CSLS website.
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Number 44, Spring 2023
Editors’ Overview Andrew Sharpe (Centre for the Studies of Living Standards) and Bart van Ark (The Productivity Institute, The University of Manchester)
- The 44th issue of the International Productivity Monitor contains five articles: a review of the rise of pro-productivity institutions; a proposal for improved measures of output, input and productivity in the non-profit sector; a comparison of estimates of capital and total factor productivity growth across international databases; an analysis of productivity in West Asian Arab countries; and lessons from productivity research.
The Rise of Pro-Productivity Institutions: A Review of Recent Developments Dirk Pilat (The Productivity Institute, The University of Manchester)
- This article reviews the recent analytical work and policy recommendations of eleven national productivity commissions, i.e. Australia, Belgium, Denmark, Finland, France, Germany, Ireland, the Netherlands, New Zealand, Portugal, and the United Kingdom. It finds several differences between the commissions as regards institutional set-up, composition, and degree of independence, amongst others. The commissions have much more in common in their analytical and policy work. This likely reflects common challenges, such as the slowdown in productivity and the COVID-19 crisis, as well as structural trends such as digitalization. It also reflects a shared understanding of the main drivers of productivity, notably investment, human capital, innovation, digitalization and creative destruction, and the policies affecting those drivers. The article also finds some areas that have not yet received much attention from commissions, such as the link between the environment and productivity or the relationship between productivity, wages, and inequality. The rise of productivity commissions across the OECD area provides a rich source of analysis and policy learning that should be drawn on by academics, policy makers and others interested in productivity.
Fuller Measures of Output, Input and Productivity in the Non-Profit Sector: A Proof of Concept for the United Kingdom Josh Martin (Bank of England and Economic Statistics Centre of Excellence) and Jon Franklin (Pro Bono Economics)
- We explore the appropriate conceptual framework for thinking about the output and productivity of the non-profit sector, and sketch a roadmap for measuring the productivity of this sector. Doing so requires us to go beyond the National Accounts, since some inputs to the non-profit sector (such as volunteer time) are outside the GDP boundary. Using a range of publicly available data we estimate new input and output measures for the Non-Profit Institutions Serving Households (NPISH) sector in the UK, and from these estimate labour productivity levels and growth. We find that the NPISH sector in the UK has grown rapidly over the past 20 years, with hours worked and nominal GVA growing faster than for the economy as a whole. Our fuller measures suggest NPISH accounts for about 4.4 percent of GDP in 2019, up from 3.3 percent two decades before, and compared with 2.9 per cent in 2019 before conceptual adjustments. The NPISH sector is less productive than the UK average, although similar to other labour-intensive industries like retail. We estimate little growth in labour productivity between 1997 and 2019, although price measurement in the relevant industries is difficult, so there is considerable uncertainty around our estimates of real GVA and productivity growth.
Capital Measurement and Productivity Growth Across International Databases Reitze Gouma and Robert Inklaar (University of Groningen)
- A country’s multifactor productivity (MFP) growth, the growth of GDP that is not accounted for by growth of factor inputs, is of great interest as an indicator of living standards and technological progress. Yet different well-established databases show markedly different MFP growth rates for the same country and period. In this article, we show that differences in the measurement of capital input can account for one-third of the range of MFP growth rates across databases. Harmonizing a series of methodological choices for capital measurement substantially reduces variation across databases, but sizeable differences remain. This work highlights the continued relevance of these choices and can inform users who try to understand differences between databases and assess the robustness of differences in MFP growth across countries to measurement choices.
The Falling Productivity in West Asian Arab Countries Since the 1980s: Causes, Consequences, and Cures Abdul A. Erumban (University of Groningen)
- This article analyzes the macro trends in real per capita GDP and productivity in 12 West Asian Arab countries, distinguishing between the oil-rich GCC economies and t1he non-GCC West Asian Arab economies. We use a panel data econometric analysis to understand the trade-off between productivity and job creation in the region. Further, we examine the sources of aggregate labour productivity growth in terms of a) structural change and within-industry productivity improvements and b) capital deepening and total factor productivity growth. Although the nature of productivity problems in the two groups of countries – the GCC and non-GCC West Asian Arab economies – differ, the challenges in addressing those are substantial for both. Developing a vibrant private sector that can foster productivity growth is a common challenge for both groups of countries. The inability to embrace innovation and technology and to translate investment in capital to productivity are important impediments to boosting productivity growth. Focusing on technology and innovation, continuing the efforts to diversify away from oil, and upskilling the local workforce are essential to creating more productive jobs for the native population.
Lessons from a Career in Productivity Research: Some Answers, A Glimpse of the Future, and Much Left to Learn Martin Neil Baily (The Brookings Institution)
- This study presents lessons learned from a career in productivity research. It examines the extent to which the key empirical questions about productivity have been answered. Aggregate and industry growth data are reviewed and show how a few industries contribute a lot to overall growth; notable is the large contribution of high-tech manufacturing to U.S. TFP growth (also the case for Japan). There is an extended summary of the lessons learned from cross-country comparisons of the levels of productivity in different industries using business economics information. Strong competitive intensity is positive for productivity, while regulations and trade restrictions are negative. The article concludes with an optimistic note on the productivity impact of generative AI.