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The Industry Anatomy of the Transatlantic Productivity Growth Slowdown: Europe Chasing the American Frontier

Author

Listed:
  • Robert J. Gordon
  • Hassan Sayed

Abstract

By merging KLEMS data covering 16 industry groups within the total economy and 11 manufacturing sub-industries, we compare and contrast productivity growth from 1950 to 2015 in the United States with an aggregate of the ten largest European nations (EU-10) from 1972 to 2015. We interpret the EU-10 performance as catching up to the United States in stages. Strikingly, the total economy "early-to-late" productivity growth slowdown from 1972-1995 to 2005-2015 in the EU-10 (-1.68 percentage points) was almost identical to the U.S. slowdown from 1950-1972 to 2005-2015 (-1.67 percentage points). There is a very high EU-U.S. correlation in the magnitude of the early-to-late slowdown in each industry, suggesting that the productivity growth slowdown from the early postwar years to the most recent decade was due to a retardation in technical change that affected the same industries by roughly the same magnitudes on both sides of the Atlantic.

Suggested Citation

  • Robert J. Gordon & Hassan Sayed, 2019. "The Industry Anatomy of the Transatlantic Productivity Growth Slowdown: Europe Chasing the American Frontier," International Productivity Monitor, Centre for the Study of Living Standards, vol. 37, pages 3-38, Fall.
    • Handle: RePEc:sls:ipmsls:v:37:y:2019:1
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    File URL: http://www.csls.ca/ipm/37/Gordon.pdf
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    Citations

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    Cited by:

    1. Gordon, Robert J. & Sayed, Hassan, 2020. "Transatlantic Technologies: The Role of ICT in the Evolution of U.S. and European Productivity Growth," CEPR Discussion Papers 15011, C.E.P.R. Discussion Papers.
    2. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    3. Kuusi, Tero & Nevavuo, Jenni, 2023. "Breakthrough Innovations and Productivity: An International Perspective," ETLA Working Papers 101, The Research Institute of the Finnish Economy.
    4. Liu, Weilin & Cheng, Qian & Sickles, Robin C., 2022. "Productivity Growth and Spillovers across European Industries: A Global Value Chain Perspective Based on EURO KLEMS," Working Papers 22-001, Rice University, Department of Economics.
    5. Robert J. Gordon & Hassan Sayed, 2020. "Transatlantic Technologies: The Role of ICT in the Evolution of U.S. and European Productivity Growth," NBER Working Papers 27425, National Bureau of Economic Research, Inc.
    6. Vu, Khuong & Hartley, Kris, 2022. "Sources of transport sector labor productivity performance in industrialized countries: Insights from a decomposition analysis," Transport Policy, Elsevier, vol. 129(C), pages 204-218.
    7. Norbert Ernst & Nico Pintar & Richard Sellner, 2023. "Resource Misallocation and TFP Gap Development in Austria (Richard Sellner, Nico Pintar, Norbert Ernst)," Working Papers 246, Oesterreichische Nationalbank (Austrian Central Bank).
    8. David Martinez Turegano, 2020. "Sectoral productivity vis-à-vis the US and heterogeneity within the EU27: the role of firm size distribution and firm demographics," JRC Research Reports JRC122059, Joint Research Centre.

    More about this item

    Keywords

    Productivity growth; Europe; United States;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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