Pr Productivity oductivity Gr Growth? owth? Key Macro Trends and - - PowerPoint PPT Presentation

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Pr Productivity oductivity Gr Growth? owth? Key Macro Trends and - - PowerPoint PPT Presentation

Jan 20, 2023 212 likes •477 views

Whats Happening to Pr Productivity oductivity Gr Growth? owth? Key Macro Trends and Patterns Karim m Foda January ary 13, 2017 Motivation Mo vation GDP growth is slowing down around the world, driven in large part by GDP per

slide-1
SLIDE 1

What’s Happening to Pr Productivity

  • ductivity Gr

Growth?

  • wth?

Key Macro Trends and Patterns

Karim m Foda January ary 13, 2017

slide-2
SLIDE 2

Mo Motivation vation

  • GDP growth is slowing down around

the world, driven in large part by weak productivity growth.

  • Labor force participation rates for

prime-working-age men have been falling.

  • Many advanced and some emerging

economies have aging populations.  Pr Produc uctiv tivity ity is key to futur ture e growth th

1 2 3 4 5 6

Advanced Emerging and Developing

percent

GDP per capita growth

(annual average)

1990-1999 2000-2007 2008-2015

slide-3
SLIDE 3
  • There is a widespread slowdown in labor productivity growth

across both advanced and emerging market economies.

  • It is primarily driven by slowing TFP growth, but capital

deepening has played a more visible role in recent years.

  • The slowdown is broad-based, spanning manufacturing and

service industries.

  • The slowdown predates the crisis in advanced economies,

beginning in 2004 in the U.S. after the ICT boom and earlier in Europe and Japan.

Th The Bo e Botto tom m Li Line ne

slide-4
SLIDE 4

Source: The Conference Board. Note: Output per person employed.

  • 2
  • 1

1 2 3 4 5 6 7 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 percent

Emerging & Developing Advanced

La Labo bor Prod

  • duc

uctivity tivity Grow rowth th

slide-5
SLIDE 5

Data source: OECD Productivity Statistics. Note: Output per hour worked.

  • 1

1 2 3 4 5

1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

percent

Canada France Germany Italy Japan UK US

US

Tren end d La Labo bor Prod

  • duc

uctivity tivity Growth

  • wth in

in Adv dvan ance ced d Econ

  • nomies
  • mies
slide-6
SLIDE 6

Con

  • nvergenc

ergence e an and d Div ivergenc ergence e in in Lab Labor

  • r Pr

Prod

  • duc

uctivity tivity

United States = 1

Source: Calculations based on data from The Conference Board. Note: Output per hour worked, output in constant 2015 US$ (converted to 2015 price level with updated 2011 PPPs)

0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10

1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990

1950-1990

Japan Canada United States France Germany Italy Spain United Kingdom

0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05 1.10

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1990-2015

Japan Canada United States France Germany Italy Spain United Kingdom

slide-7
SLIDE 7

Source: Calculations based on data from The Conference Board. Note: Output per hour worked. Groups aggregated using GDP-PPP weights. Other Advanced includes Australia, Canada, Hong Kong, Israel, New Zealand, Singapore, South Korea and Taiwan.

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

Advanced United States Europe Japan Other Advanced

percent

1990-1995 1996-2004 2005-2015

La Labo bor Prod

  • duc

uctivity tivity Grow rowth th in in Adv dvan ance ced d Econ

  • nomies
  • mies
slide-8
SLIDE 8

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

UK Euro Area France Germany Italy Spain Sweden Australia Canada

percent

1990-1995 1996-2004 2005-2015

La Labo bor Prod

  • duc

uctivity tivity Grow rowth th in in Adv dvan ance ced d Econ

  • nomies
  • mies

Source: Calculations based on data from The Conference Board. Note: Output per hour worked. Groups aggregated using GDP-PPP weights.

slide-9
SLIDE 9

De Decompos posing ing Labor r Pr Producti ctivity vity Gr Growt wth: h: TF TFP a P and Ca Capital tal De Deepen ening ing

United States

Data source: OECD Productivity Database. Note: Decomposition of growth in output per hour worked.

0.7 1.6 0.6 0.4 0.6 0.2 0.3 0.3 0.3

0.0 0.5 1.0 1.5 2.0 2.5 3.0

1990-1995 1996-2004 2005-2015 United States

percent

TFP ICT capital deepening Non-ICT capital deepening

slide-10
SLIDE 10

De Decompos posing ing Labor r Pr Producti ctivity vity Gr Growt wth: h: TF TFP a P and Ca Capital tal De Deepen ening ing

United States

Data source: OECD Productivity Database. Note: Decomposition of growth in output per hour worked.

0.7 1.6 0.6 0.7 0.3 0.4 0.6 0.2 0.3 0.1 0.3 0.3 0.3 0.4

  • 0.1
  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5 3.0

1990-1995 1996-2004 2005-2015 2005-2011 2012-2015 United States

percent

TFP ICT capital deepening Non-ICT capital deepening

slide-11
SLIDE 11
  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5 3.0

1990-1995 1996-2004 2005-2015 1990-1995 1996-2004 2005-2015 1990-1995 1996-2004 2005-2015 1990-1995 1996-2004 2005-2015 1990-1995 1996-2004 2005-2015 1990-1995 1996-2004 2005-2015 Japan United Kingdom France Germany Italy Spain

TFP ICT capital deepening Non-ICT capital deepening

De Decompos posing ing Labor r Pr Producti ctivity vity Gr Growt wth: h: TF TFP a P and Ca Capital tal De Deepen ening ing

Other Advanced Economies

Data source: OECD Productivity Database. Note: Decomposition of growth in output per hour worked.

slide-12
SLIDE 12

A Broa

  • ad-Bas

Based ed Ris ise e an and F d Fal all l in in US TFP Growth

  • wth

Percentage point change in average industry TFP growth

Source: Calculations based on data from Bureau of Labor Statistics Multifactor Productivity database. Note: Industries ranked by change in average value-added TFP growth between both periods, based on Byrne, Fernald and Reinsdorf (2016). Striped bars denote manufacturing industries.

Industries with largest positive acceleration in recent period (right panel) are (i) funds and trusts, (ii) water transport and (iii) oil and gas extraction. Industries with largest negative deceleration in the same period are (i) apparel and leather and applied products, (ii) petroleum and coal products and (iii) computer and electronic products.

  • 15
  • 10
  • 5

5 10 15

10 20 30 40 50 60 Industry

  • 20
  • 15
  • 10
  • 5

5 10 15 20 25

10 20 30 40 50 60 Industry

Broad

  • ad Rise

se

1988-1995 to 1996-2004

Broad

  • ad Fall

1996-2004 to 2005-2014

slide-13
SLIDE 13

Source: Calculations based on data from Bureau of Labor Statistics Multifactor Productivity database. Note: Recreated from Baily and Montalbano (2016), but with changes in average value-added TFP growth between both periods, based on Byrne, Fernald and Reinsdorf (2016).

Manufacturing Agriculture, Forestry and Fishery Mining Utilities Construction Wholesale Trade Retail Trade Transportation Information Finance, Insurance and Real Estate Services

  • 6
  • 4
  • 2

2 4 6 8

  • 8
  • 6
  • 4
  • 2

2 4 6

Faster growth 1996-2004 Slower growth 2005-2015

Ris isin ing g an and F d Fal alli ling ng Tog

  • get

ethe her

Average US industry TFP growth

slide-14
SLIDE 14

In Indu dustry try Con

  • ntrib

tributi utions

  • ns to

to th the e Ris ise e an and F d Fal all l in in US S TF TFP P Growth

  • wth

Source: Calculations based on data from Bureau of Labor Statistics Multifactor Productivity database. Note: Domar weights used to aggregate industry contributions. Recreated from Baily and Montalbano (2016).

The Rise The Fall

1.08

  • 0.17
  • 0.08
  • 0.05

0.02 0.07 0.09 0.10 0.11 0.15 0.40 0.43

  • 0.4
  • 0.2

0.0 0.2 0.4 0.6 0.8 1.0 1.2

Aggregate TFP Growth Utilities Construction Mining Transportation Retail Trade Information Agriculture FIRE Wholesale Trade Manufacturing Services

Contributions to TFP Growth 1996-2004 minus Contributions 1987-1995

  • 1.36

0.18 0.13 0.04 0.04

  • 0.07
  • 0.08
  • 0.09
  • 0.15
  • 0.30
  • 0.31
  • 0.74
  • 1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2

0.0 0.2 0.4

Aggregate TFP Growth FIRE Mining Utilities Information Transportation Construction Agriculture Services Wholesale Trade Retail Trade Manufacturing

Contributions to TFP Growth 2005-2014 minus Contributions 1996-2004

slide-15
SLIDE 15

Hol

  • ldi

ding ng In Indu dustry try We Weig ight hts s Fi Fixed ed

United States average TFP growth

Source: Byrne, Fernald and Reinsdorf (2016). Note: Orange bars show actual average growth in business sector TFP. Blue bars show counterfactual where industry weights (shares in aggregate value added) are held constant at 1987 values.

0.0 0.5 1.0 1.5 2.0

1987-1995 1995-2004 2004-2013

percent

Count unter er-fact actual ual Actual ual

slide-16
SLIDE 16

A Wi A Wide despread, pread, Br Broa

  • ad-Base

Based d Sl Slow

  • wdo

down wn

Percentage point changes in industry TFP Growth: 1996-2004 to 2005-2014

Source: Calculations based on data from EU KLEMS. Note: Lighter shade bars denote manufacturing industries. UK data begins in 1999, Germany and Netherlands data begins in 2001, Sweden data ends in 2013.

  • 10
  • 8
  • 6
  • 4
  • 2

2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Industry

France

  • 30
  • 25
  • 20
  • 15
  • 10
  • 5

5 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Industry

UK

  • 8
  • 6
  • 4
  • 2

2 4 6 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Industry

Germany

  • 8
  • 6
  • 4
  • 2

2 4 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Industry

Spain

  • 10
  • 8
  • 6
  • 4
  • 2

2 4 6 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Industry

Netherlands

  • 20
  • 15
  • 10
  • 5

5 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Industry

Sweden

slide-17
SLIDE 17

A Wor

  • rd

d on

  • n Me

Meas asure urement ment

Adjustments to growth in US output per hour

Source: Byrne, Fernald and Reinsdorf (2016). Note: Other comprises Internet, free digital services, globalization and fracking.

  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

1978-1995 1995-2004 2004-2014

percentage points

Publi lished data ta comp mputers/c rs/commun mmunic icati tions soft ftware re, specia iali lized equip ipmen ment inta tangib ibles les

  • ther
slide-18
SLIDE 18

Source: The Conference Board. Note: Output per person employed.

  • 2
  • 1

1 2 3 4 5 6 7 8 9

Emerging Markets and Developing Economies China India Other Developing Asia Indonesia Latin America Sub-Saharan Africa South Africa

percent

1990-1999 2000-2007 2008-2015

Labor r Pro roductivity ctivity Gr Growth th in Emergin rging and D Developi eloping ng Economies

  • mies
slide-19
SLIDE 19

Source: The Conference Board.

  • 2
  • 1

1 2 3 4 5

Emerging Markets and Developing Economies China India Other Developing Asia Indonesia Latin America Sub-Saharan Africa South Africa

percent

1990-1999 2000-2007 2008-2015

TFP Growth

  • wth in

in Eme mergi rging ng an and De d Devel elop

  • ping

ing Econ

  • nomies
  • mies
slide-20
SLIDE 20

Source: The Conference Board.

  • 3
  • 2
  • 1

1 2 3 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 percent

Emerging & Developing Advanced

Tot

  • tal

al Fac actor tor Prod

  • duc

uctivity tivity Growth

  • wth
slide-21
SLIDE 21

We Weak ak In Investm estment ent in Ad Advance vanced d Ec Econo

  • nomies

ies Sl Slowin wing g In Investment vestment in Em Emerging erging and nd Developing veloping

Sources: OECD Economic Outlook June 2015 for Real Gross Investment figure; IMF World Economic Outlook April 2015 for Investment-to-Capital ratios via Laeven and Valencia (2014). Notes: For gross investment, “emerging” includes Brazil, China, India, Indonesia, Mexico, Russia, South Africa and Turkey. For investment-to-capital ratio, they include Brazil, China, India, Mexico, Russia and Turkey.

6 8 10 12 14 16 18

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 percent Emerging economies Emerging economies excluding China

Real Gross ss Investme estment nt

2007 Q4 = 100

Investme stment-to to-Capital ital Ratio io

40 60 80 100 120 140 160 180

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2007 Q4 = 100 OECD Emerging economies Emerging economies excluding China

slide-22
SLIDE 22

Po Pote tentia ntial l Ou Outp tput ut Gr Growth

  • wth in Ad

Advan vanced ced Ec Econ

  • nomies
  • mies

(OECD)

Source: OECD Economic Outlook, June 2016. Notes: Potential employment rate refers to potential employment as a share of the working-age population. Active population rate refers to the share of the population of working age in the total population.

  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

percent

Capital per worker TFP Potential employment rate Active population rate Potential per capita growth

slide-23
SLIDE 23
  • There is a widespread slowdown in labor productivity growth

across both advanced and emerging market economies.

  • It is primarily driven by slowing TFP growth, but capital

deepening has played a more visible role in recent years.

  • The slowdown is broad-based, spanning manufacturing and

service industries.

  • The slowdown predates the crisis in advanced economies,

beginning in 2004 in the U.S. after the ICT boom and earlier in Europe and Japan.

Th The Bo e Botto tom m Li Line ne

slide-24
SLIDE 24
  • Slowdown in innovation or diffusion? Dispersion in firm-level TFP

growth suggests that weak diffusion has played a role (OECD 2015).

  • Declining business dynamism and increased market concentration.

Impacts on productivity?

  • Weak investment despite lower price of investment (investment

paradox?).

  • Skill-biased technological change, skills mismatches and constraints.
  • Barriers to innovation, regulatory distortions, misallocation of inputs.

Po Possible ible Ex Expl planation anations s to Ex

  • Expl

plore

  • re