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World Productivity: 1996 - 2014

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Abstract

We account for the sources of world productivity growth, using data for more than 36 industries and 40 major economies from 1996 to 2014, explicitly taking into account changes in the misallocation of resources in labor, capital, and product markets. Productivity growth in advanced economies slowed but emerging markets grew more quickly which kept global productivity growth relatively constant until around 2010. After that, productivity growth in all major regions slowed. Much of the volatility in world productivity growth reflects shifts in the misallocation of labor across countries and industries. Using new data on PPP-based value-added measures by country and industry, we show that about a third of these shifts is due to employment growing in countries, most notably China and India, that benefit from an international cost advantage. Markups are large and rising and impact the imputed misallocation of capital. However, they have little effect on the country-industry technology contribution to global productivity.

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  • Mehrdad Esfahani & John G. Fernald & Bart Hobijn, 2020. "World Productivity: 1996 - 2014," Working Paper Series 2020-17, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:87891
    DOI: 10.24148/wp2020-17
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    Cited by:

    1. Kevin Hjortshøj O’Rourke, 2021. "Capitalism: Worries of the 1930s for the 2020s," Working Papers 20210064, New York University Abu Dhabi, Department of Social Science, revised Apr 2021.

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    More about this item

    Keywords

    Growth accounting; misallocation; productivity; purchasing power parity; world economy;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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