Marcel P. Timmer

Economic Growth in Europe: Drivers of productivity growth in Europe

Paths for productivity growth in Europe In this book we have documented and analysed Europes productivity performance since the mid 1990s and compared it to growth since the 1970s, as well as to the productivity record of the United States. On both counts, Europes performance has been disappointing as labour productivity growth has seriously slowed since 1995, while it has accelerated in the United States. In this book we have analysed the determinants of Europes poor productivity performance using a new database on productivity at the industry level, the EU KLEMS database. While our findings confirm the established view that the growing role of ICT and continued improvements in human capital are important drivers of labour productivity growth, this appears not to be the main reason that Europe has failed to show faster productivity growth. While there are differences across European countries and between Europe and the USA, ICT investment has become a more important source of growth everywhere, as illustrated in Chapter 3. Slower productivity growth in Europe since the mid 1990s has been mainly related to a slowdown in the efficiency with which labour and capital are used, as measured by multi-factor productivity (MFP) growth. Indeed one key finding of Chapter 2 is that European growth could benefit from exploiting the increased potential for productivity growth in market services. In contrast to earlier suggestions in the literature, services industries such as trade and business services may see rapid labour productivity growth, as evidenced by the US experience.

Economic Growth in Europe: The industry origins of aggregate growth

Introduction The purpose of this chapter is to examine in more detail the industry origins of growth. This involves analysing how the growth of inputs and MFP of each industry contributes to aggregate value added. Thus we not only look at which industries contribute most to productivity growth but also which industries contribute most to the increased use of ICT and skilled labour. In addition, we will provide analyses based on data for twenty-six detailed industries, rather than for broad sectors as done so far. These yield much richer information on the sources of growth than those in earlier chapters as the latter could miss sizeable within-group heterogeneity. As before, we focus on two areas: the performance of the European Union over the period 1980–2005, and a comparison of the EU with the USA for the 1995–2005 period. The chapter is organised as follows. Section 5.2 outlines the methodology used to determine industries contributions to aggregate growth. This is based on the direct aggregation over industries approach, outlined in Jorgenson et al . (2005). Section 5.3 examines labour productivity trends at the industry level and analyses contributions to aggregate productivity growth in the EU and USA. In the following sections this contribution is further dissected. In section 5.4 the contribution of input growth in industries to aggregate growth is determined for ICT capital, non-ICT capital and labour composition separately. Section 5.5 is devoted to the contributions from industry-level multi-factor productivity (MFP) growth.

ICT and Productivity Growth in Europe: An update and comparison with the US

Information and communication technologies (ICT) are spreading fast across Latin America and the Caribbean. This trend has brought about important economic and social changes, which have largely gone unmeasured until recently. Here, analysts from the United Nations Economic Commission for Latin America and the Caribbean along with other distinguished scholars in the field of ICT, growth and productivity provide theoretical and empirical insights to the debate on the role of ICT in economic development.