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Mind the Gap! International Comparisons of Productivity in Services and Goods Production

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  • Robert Inklaar
  • Marcel P. Timmer
  • Bart van Ark

Abstract

In this paper, we make a comparison of industry output, inputs and productivity growth and levels between seven advanced economies (Australia, Canada, France, Germany, the Netherlands, United Kingdom and United States). Our industry-level growth accounts make use of input data on labour quantity (hours) and composition (schooling levels), and distinguish between six different types of capital assets (including three information and communication technology (ICT) assets). The comparisons of levels rely on industry-specific purchasing power parities (PPPs) for output and inputs, within a consistent input-output framework for the year 1997. Our results show that differences in productivity growth and levels can be mainly traced to market services, not to goods-producing industries. Part of the strong productivity growth in market services in Anglo-Saxon countries, such as in Australia and Canada, may be related to relatively low productivity levels compared with the United States. In contrast, services productivity levels in continental European countries were on par with the United States in 1997, but growth in Europe was much weaker since then. In terms of factor input use, the United States is very different from all other countries, mostly because of the more intensive use of ICT capital in the United States. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2007.

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Bibliographic Info

Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 8 (2007)
Issue (Month): (05)
Pages: 281-307

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Handle: RePEc:bla:germec:v:8:y:2007:i::p:281-307

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References

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  1. van Ark, Bart & Inklaar, Robert, 2006. "Catching up or getting stuck? Europe's troubles to exploit ICT's productivity potential," GGDC Research Memorandum GD-79, Groningen Growth and Development Centre, University of Groningen.
  2. Susanto Basu & John Fernald, 2007. "Information and Communications Technology as a General-Purpose Technology: Evidence from US Industry Data," German Economic Review, Verein für Socialpolitik, vol. 8, pages 146-173, 05.
  3. Gordon, Robert J, 2004. "Why Was Europe Left at the Station when America's Productivity Locomotive Departed?," CEPR Discussion Papers 4416, C.E.P.R. Discussion Papers.
  4. Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, Productivity and Growth: OECD Evidence," OECD Economics Department Working Papers 347, OECD Publishing.
  5. Dirk Pilat, 1996. "Labour Productivity Levels in OECD Countries: Estimates for Manufacturing and Selected Service Sectors," OECD Economics Department Working Papers 169, OECD Publishing.
  6. Ark, Bart van & Inklaar, Robert & McGuckin, Robert H., 2003. "ICT and productivity in Europe and the United States," CCSO Working Papers 200311, University of Groningen, CCSO Centre for Economic Research.
  7. Stephen D. Oliner & Daniel E. Sichel, 2002. "Information technology and productivity: where are we now and where are we going?," Economic Review, Federal Reserve Bank of Atlanta, issue Q3, pages 15-44.
  8. Laurits R. Christensen & Dianne Cummings & Dale Jorgenson, 1980. "Economic Growth, 1947-73;An International Comparison," NBER Chapters, in: New Developments in Productivity Measurement, pages 595-698 National Bureau of Economic Research, Inc.
  9. Theo Eicher & Oliver Röhn, 2007. "Sources of the German Productivity Demise – Tracing the Effects of Industry-Level ICT Investment," CESifo Working Paper Series 1896, CESifo Group Munich.
  10. Robert Inklaar & Mary O'Mahony & Marcel Timmer, 2005. "ICT AND EUROPE's PRODUCTIVITY PERFORMANCE: INDUSTRY-LEVEL GROWTH ACCOUNT COMPARISONS WITH THE UNITED STATES," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(4), pages 505-536, December.
  11. Robert Inklaar & Marcel Timmer, 2007. "International Comparisons of Industry Output, Inputs and Productivity Levels: Methodology and New Results," Economic Systems Research, Taylor & Francis Journals, vol. 19(3), pages 343-363.
  12. Erik Brynjolfsson & Lorin M. Hitt, 2003. "Computing Productivity: Firm-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 793-808, November.
  13. Stephen D. Oliner & Daniel E. Sichel, 2000. "The resurgence of growth in the late 1990s: is information technology the story?," Finance and Economics Discussion Series 2000-20, Board of Governors of the Federal Reserve System (U.S.).
  14. Timmer, Marcel & Inklaar, Robert, 2005. "Productivity differentials in the U.S. and EU distributive trade sector: statistical myth or reality," GGDC Research Memorandum 200576, Groningen Growth and Development Centre, University of Groningen.
  15. Mary O'Mahony & Michela Vecchi, 2005. "Quantifying the Impact of ICT Capital on Output Growth: A Heterogeneous Dynamic Panel Approach," Economica, London School of Economics and Political Science, vol. 72(288), pages 615-633, November.
  16. Francesco Daveri, 2004. "Delayed IT Usage: Is it really the drag on Europe's productivity?," Working Papers 267, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  17. van Ark, Bart, 1998. "Productivity," Journal of the Japanese and International Economies, Elsevier, vol. 12(2), pages 171-174, June.
  18. Someshwar Rao & Andrew Sharpe & Jeremy Smith, 2005. "An Analysis of the Labour Productivity Growth Slowdown in Canada since 2000," International Productivity Monitor, Centre for the Study of Living Standards, vol. 10, pages 3-23, Spring.
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Citations

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Cited by:
  1. Susanto Basu & John Fernald, 2006. "Information and communications technology as a general-purpose technology: evidence from U.S industry data," Working Paper Series 2006-29, Federal Reserve Bank of San Francisco.
  2. Henry van der Wiel & Harold Creusen, 2008. "Cross your border and look around," CPB Document 170, CPB Netherlands Bureau for Economic Policy Analysis.
  3. Joseph F. Francois & Bernard Hoekman, 2009. "Services Trade and Policy," Economics working papers 2009-03, Department of Economics, Johannes Kepler University Linz, Austria.
  4. McMorrow, Kieran & Röger, Werner & Turrini, Alessandro Antonio, 2009. "The EU-US total factor productivity gap : An industry-level perspective," CEPR Discussion Papers 7237, C.E.P.R. Discussion Papers.
  5. Dankbaar, Ben & Vissers, Geert, 2009. "Of knowledge and work," MPIfG Working Paper 09/16, Max Planck Institute for the Study of Societies.
  6. Mas, Matilde & Quesada, Javier & Robledo, Juan Carlos, 2007. "Las nuevas tecnologías y la competitividad industrial
    [New technologies and industrial competiveness]
    ," MPRA Paper 15826, University Library of Munich, Germany, revised 2007.
  7. Thierry Tressel, 2008. "Does Technological Diffusion Explain Australia's Productivity Performance?," IMF Working Papers 08/4, International Monetary Fund.
  8. Hoekman, Bernard & Mattoo, Aaditya, 2008. "Services trade and growth," Policy Research Working Paper Series 4461, The World Bank.
  9. Luc Soete, 2007. "From Industrial to Innovation Policy," Journal of Industry, Competition and Trade, Springer, vol. 7(3), pages 273-284, December.
  10. Marcel P. Timmer & Robert Inklaar & Mary O'Mahony & Bart van Ark, 2011. "Productivity and Economic Growth in Europe: A Comparative Industry Perspective," International Productivity Monitor, Centre for the Study of Living Standards, vol. 21, pages 3-23, Spring.
  11. Pamfili Antipa & Marie-Elisabeth de la Serve, 2010. "International Comparisons of Industry-based Productivity Levels in the Financial and Business Service Sectors," International Productivity Monitor, Centre for the Study of Living Standards, vol. 19, pages 66-81, Spring.
  12. Robert Inklaar & Marcel P. Timmer, 2007. "Of Yeast and Mushrooms: Patterns of Industry-Level Productivity Growth," German Economic Review, Verein für Socialpolitik, vol. 8, pages 174-187, 05.
  13. Paul Schreyer, 2007. "International Comparisons of Levels of Capital Input and Multi-Factor Productivity," German Economic Review, Verein für Socialpolitik, vol. 8, pages 237-254, 05.
  14. Huang, Chien-Yu & Ji, Lei, 2013. "Knowledge-intensive business services and economic growth with endogenous market structure," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 95-106.
  15. Mc Morrow, Kieran & Röger, Werner & Turrini, Alessandro, 2010. "Determinants of TFP growth: A close look at industries driving the EU-US TFP gap," Structural Change and Economic Dynamics, Elsevier, vol. 21(3), pages 165-180, August.
  16. Fukao, Kyoji & Miyagawa, Tsutomu & Takizawa, Miho, 2007. "Productivity Growth and Resource Reallocation in Japan," CEI Working Paper Series 2007-9, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  17. Bart van Ark & Charles R. Hulten, 2007. "Innovation, Intangibles and Economic Growth: Towards A Comprehensive Accounting of the Knowledge Economy," Economics Program Working Papers 07-02, The Conference Board, Economics Program.

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