Capital Measurement and Productivity Growth Across International Databases

A country’s multifactor productivity (MFP) growth, the growth of GDP that is not accounted for by growth of factor inputs, is of great interest as an indicator of living standards and technological progress. Yet different well-established databases show markedly different MFP growth rates for the same country and period. In this article, we show that differences in the measurement of capital input can account for one-third of the range of MFP growth rates across databases. Harmonizing a series of methodological choices for capital measurement substantially reduces variation across databases, but sizeable differences remain. This work highlights the continued relevance of these choices and can inform users who try to understand differences between databases and assess the robustness of differences in MFP growth across countries to measurement choices.