World Productivity: 1996-2014

We account for the sources of world GDP growth using data for 40 major economies and 36 industries from the World Input-Output Database from 1996 to 2014. We nd that the contribution of productivity growth at the country-industry level to world GDP growth is relatively constant and that the recent productivity slowdown in industrialized countries is largely oset, at the world level, by productivity growth in emerging economies. Most of the fluctuations in world productivity growth are the result of shifts in the distribution of employment across countries and industries. This shift in employment to countries with lower average labor productivity and wages is a drag on the growth of aggregate productivity in the world. Using new data on PPP-based value-added measures by country and industry, we show that about a third of this shift, however, seems to reect employment growing in countries, most notably China and India, and industries that benet from an international cost advantage in terms of deviations from PPP.