Forum 2016 Issues: Productivity & inclusive growth

© Shutterstock/Lightspring OECD Week 2016, including the Forum (31 May-1 June) and the Ministerial (1-2 June), placed a central emphasis on the need for policies that strengthen productivity and promote inclusive and sustainable growth, while allaying fears that increasing productivity just means working longer, harder and later in life.

Low productivity levels contribute to income and wealth disparities, as well as growing divergence in other well-being dimensions (education, health, jobs). This is compounded by “legacies” arising from the global financial crisis – continuing high unemployment, particularly amongst young people, and low investment (including in R&D) – all of which negatively impact productivity growth and fuel serious concerns over the current state of our economies.

Despite the enormous potential of new technologies combined with the global reach of the digital economy, advanced and emerging economies are still faced with declining productivity growth. The gap between top firms – firms at the global productivity frontier – and others seems to have widened, likely as a result of a slowdown in the diffusion of knowledge and technology, creating winner-take-all dynamics in some markets for a small group of top performers. Some also argue that the dematerialisation of the economy – the so-called “weightless economy” – makes traditional measurement of productivity obsolete, as most productivity gains occur in intangible sectors of the economy, in particular in the services sector.