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Micro Foundations for International Productivity Comparisons


  • Van Ark, B.
  • Gersbach, H.


This paper describes the methodology and procedures of international comparisons of productivity levels for twelve manufacturing industries (producing food products, beer, soap and detergents, iron and steel, machine tools, various types of machinery, computers, audio and video equipment, industrial electronics, wired communication equipment, passenger cars and car components) between Germany, Japan and the United States. These estimates were carried out for a study on comparative productivity by the McKinsey Global Institute (1993). The starting point were estimates derived form the International Comparisons of Output and Productivity (ICOP) project at the University of Groningen (van Ark and Pilat, 1993). The original ICOP estimates on output, labour input and unit value ratios (the latter were used to convert output to a common currency) for the selected industries were adjusted where necessary to attain exact matching of activities on the basis of information derived form trade sources, companies and industry experts. Significant alterations were made to individual product PPPs to take account of differences in product mix and product quality between the countries. The extent and the direction of the corrections is different for the various industies. The biases are biggest for industies within the machinery and transport equipment branches. For manufacturing as a whole the original ICOP productivity estimates were only slightly downwardly biased by about 4-6 per cent. It is concluded that when using census data for comparisons at industry level, mix and quality problems need to be carefully considered. However, at a more aggregate level, for example for major branches in manufacturing, the original census-based UVRs are more robust.
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Suggested Citation

  • Van Ark, B. & Gersbach, H., 1994. "Micro Foundations for International Productivity Comparisons," Papers 572, Groningen State, Institute of Economic Research-.
  • Handle: RePEc:fth:gronig:572

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    Cited by:

    1. repec:dgr:rugggd:200362 is not listed on IDEAS
    2. Inklaar, Robert & Wu, Harry & Ark, Bart van, 2003. ""Losing ground" : Japanese labour productivity and unit laboour cost manufacturing in comparison to the U.S," GGDC Research Memorandum 200364, Groningen Growth and Development Centre, University of Groningen.
    3. Castaldi, Carolina & Sapio, Sandro, 2006. "The Properties of Sectoral Growth: Evidence from Four Large European Economies," GGDC Research Memorandum GD-88, Groningen Growth and Development Centre, University of Groningen.
    4. Sean M. Dougherty & Robert Inklaar & Robert H. McGuckin & Bart van Ark, 2007. "International Comparisons of R&D Expenditure: Does an R&D PPP Make a Difference?," NBER Chapters,in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 291-322 National Bureau of Economic Research, Inc.
    5. repec:dgr:rugggd:200364 is not listed on IDEAS
    6. repec:dgr:rugggd:gd-88 is not listed on IDEAS
    7. Elias Kourliouros & George Korres & Emmanuel Marmaras & George Tsobanoglou, 2006. "Economic Geography and Regional Growth: An Empirical Evidence From Greece," ERSA conference papers ersa06p30, European Regional Science Association.
    8. Robert J. Hill, 2004. "Constructing Price Indexes across Space and Time: The Case of the European Union," American Economic Review, American Economic Association, vol. 94(5), pages 1379-1410, December.
    9. Müller, Gerald, 1999. "Smaller Productivity Gap Between German Regions When Different Producer Prices are Taken into Account," IWH Discussion Papers 89, Halle Institute for Economic Research (IWH).
    10. repec:dgr:rugsom:03c20 is not listed on IDEAS
    11. Laurence Nayman & Deniz Ünal-Kesenci, 2001. "The French-German Productivity Comparison Revisited : Ten Years after the German Unification," Working Papers 2001-14, CEPII research center.
    12. Bart van Ark & Erik Monnikhof & Marcel Timmer, 1999. "Prices, Quantities, and Productivity in Industry: A Study of Transition Economies in a Comparative Perspective," NBER Chapters,in: International and Interarea Comparisons of Income, Output, and Prices, pages 327-367 National Bureau of Economic Research, Inc.


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