Productivity isn’t everything, but in the long run it is almost everything
(P. Krugmann, 1994)
Productivity: What is it and why do we care about it?
Productivity is about “working smarter” rather than “working harder”. It reflects our ability to produce more output by better combining inputs, owing to new ideas, technological innovations and business models. Productivity growth is therefore essential for an economy to increase its living standards and offer future generations a better live.
Why are so many economies worried about their productivity performance lately?
Despite rapid technological change, increasing participation of firms and countries in global value chains, and rising education levels, productivity growth has slowed across all advanced economies. In fact, productivity growth in the post-crisis period was even weaker than before the crisis. These seemingly contradictory facts have sparked a lively debate on the underlying causes and future prospects.
Notes: Central Europe includes Austria, Belgium, Germany, Luxembourg, the Netherlands and Switzerland; Nordic countries includes: Denmark, Finland, Iceland, Norway and Sweden; Southern Europe includes Greece, Italy, Portugal and Spain. For 1970-96, Central Europe excludes Austria.
Source:OECD Productivity Statistics (database), February 2016.
What are OECD countries doing?
Most countries have established public bodies that provide analysis and policy advice on productivity related issues. Australia, New Zealand, Denmark, Norway, Mexico and Chile for instance have established Productivity Commissions to develop better long-term policies. Other countries and supra-national authorities such as the European Council have adopted multi-faceted institutional arrangements and recommendations that are oriented towards enhancing productivity. On a multinational level, these efforts are brought together by a group of 16 OECD member countries under the auspices of the Global Forum on Productivity (GFP).
The Global Forum on Productivity – How we contribute to the debate
The GFP brings together the national and supra-national efforts mentioned above so as to leverage country-specific experiences to the long-term benefit of other countries. It is a practical, interactive tool that helps to promote the international co-operation on analysis; allows for a mutual exchange of information and data; and facilitates the sharing of experiences and policy developments. In so doing, the GFP can help those inside or outside governments seeking answers to three questions:
- What factors can explain the productivity slowdown?
- What can countries do to improve future prospects for productivity growth and innovation?
- What can countries do to improve the design of institutions seeking to promote higher productivity and inclusiveness?