Digitalisation and Beyond: The COVID-19 Pandemic and Productivity Growth in G20 Countries

The Italian G20 presidency has included reviving productivity growth as one of its priorities. Against this background, this Economic Brief discusses productivity growth in G20 economies in the context of the COVID-19 pandemic, paying attention to digitalisation, the emergence of digital platforms and intangible investment, and highlights related policy priorities. The COVID-19 pandemic is affecting productivity growth in many ways (e.g. through human capital, investment, resource reallocation, frictions to global value chains, etc.) and is likely to leave scars. Fostering digitalisation and intangible investment can help the recovery thanks to their overall positive impact on productivity. Key policies to unlock productivity growth discussed in the paper include: (i) high-quality investments in innovation, human capital and infrastructure, (ii) well-functioning labour and product markets to facilitate resource reallocation also across sectors, to absorb the shock of the crisis, (iii) facilitating access to finance and liquidity, and (iv) a supportive business environment. There is strong value added in international cooperation for productivity-enhancing policies: international cooperation can allow the sharing of information on lessons learnt and best practices. Moreover, common efforts and joint initiatives (for example, in investment) can maximise the impact of the measures and the positive spillovers. International coordination in the G20 can also contribute to fill existing data gaps to enable more evidence-based policy decisions.