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Why do the long-term growth and productivity trends of Europe and the US differ?

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  • Bernhard Felderer

Abstract

In the 1960s real growth in Europe surpassed that of the United States. Thereafter, growth rates in both regions tended to decline. At the beginning of the 1980s, however, the US entered a phase of strong economic growth so that the growth rates and the increase in employment are considerably higher than in Europe. Prof. Bernhard Felderer, director of the Institute for Advanced Studies in Vienna and professor of economics at the University of Cologne attributes this divergent development to the wider application of new information and communications technologies in the US, among other factors. The gap between Europe and the US in this area, which widened during the 1990s, is no coincidence but can be explained in terms of rational, economic calculation: the costs of the employment of new IC technology in the firms and the costs of operating a private PC were several times higher in Europe than in the US in the 1990s. Also because of more numerous regulations, Europe lagged behind the US in terms of productivity development in the 1990s. These differing trends cannot be eliminated in the short term and will prevail in the years to come.

Suggested Citation

  • Bernhard Felderer, 2001. "Why do the long-term growth and productivity trends of Europe and the US differ?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(01), pages 15-23, March.
    • Handle: RePEc:ces:ifosdt:v:54:y:2001:i:01:p:15-23
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    References listed on IDEAS

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    Cited by:

    1. Gebhard Flaig, 2001. "Is there a "new economy"? Effects on the American production potential," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(05), pages 16-21, October.
    2. Klaus Abberger & Gebhard Flaig & Wolfgang Nierhaus, 2007. "ifo Konjunkturumfragen und Konjunkturanalyse : ausgewählte methodische Aufsätze aus dem ifo Schnelldienst," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 33.

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    More about this item

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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