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Mid-Tech Europe? Sectoral Patterns Of Total Factor Productivity Growth: Eu Vs. Usy

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  • Plamen Nikolov
  • Wouter Simons
  • Alessandro Turrini
  • Peter Voigt

Abstract

Chapter II explores the evolution of productivity, particularly Total Factor Productivity (TFP), in the EU compared to the US, using the latest EU-KLEMS dataset. TFP growth in both regions has been largely driven by a few key sectors. In the post-GFC recovery (2013–2019), services played a major role in TFP growth on both sides of the Atlantic. However, the drivers differed: in the US, high-skill sectors like IT, professional services, and finance led the way, while in the EU, contributions came more from lower-skill services such as wholesale and retail. The contribution of manufacturing also diverged. In the EU, sectors like transport equipment, chemicals, and electronics made meaningful contributions to TFP growth, whereas in the US, among manufacturing sectors only computer and electronics had a significant impact. While the share of high-tech and high-TFP-growth sectors in EU value added has been rising, the gap with the US remains substantial—and is not closing. This structural difference continues to weigh on the EU’s productivity performance.

Suggested Citation

  • Plamen Nikolov & Wouter Simons & Alessandro Turrini & Peter Voigt, 2025. "Mid-Tech Europe? Sectoral Patterns Of Total Factor Productivity Growth: Eu Vs. Usy," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 24(2), pages 23-36, August.
    • Handle: RePEc:euf:qreuro:0242-02
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