A Vertically Integrated Perspective on Nordic Manufacturing Productivity

Specialization, at the national and global level, and a growing importance of knowledge-based capital in current growth processes have led to a renewed interest in a vertically integrated perspective on productivity. This means that the focus is on all steps of the production process, regardless of in what sector or country the value creation takes place. From this perspective, Norway has improved its relative productivity since 2000 and is now the leader among the Nordic countries. Finland – and Sweden to some extent – have performed relatively poorly. Using import multipliers and splitting the domestic production chain into two productivity measures, this article shows that the vertically integrated perspective can contribute to new insights about productivity developments in trade-dependent and highly specialized countries. Important aspects of a policy for an enhanced vertically-integrated productivity are the quality of human capital, enhanced diffusion of knowledge and innovations and a holistic view of economic growth.