Solving the European Productivity Puzzle
The journal Intereconomics, published bi-monthly by CEPS and the Leibniz Information Centre for Economics (ZBW), features articles dealing with economic and social policy issues affecting Europe. Each issue contains a Forum section offering an in-depth exploration of a selected topic. All contributions to the Forum section in each issue, as well as the Editorial, are available for free downloading from the CEPS website at the links below (for full content, see www.intereconomics.eu).
Abstract: In recent years, advanced economies around the globe have experienced a pronounced slowdown in productivity growth. The causes of this so-called secular stagnation remain unclear. Someeconomists argue that we are simply measuring productivity improvements incorrectly and that thestatistics are ignoring technological innovations. Others place the blame on the Great Recession, arguing that labour productivity took the hit in countries with ﬂexible labour markets when GDP growth was constrained by globally deﬁcient demand. Most economists agree that stagnant productivity is a legitimate concern, and given that productivity growth is the main driver of economic growth, it is essential to ﬁnd remedies. Unfortunately, the current economic climate is characterised by a low potential for increased productivity growth, making it particularly difﬁcult for Europe to achieve any progress in catching up with the higher productivity levels in the US. One potential source of improvement could be increased investment in intangible capital, which is positively linked to productivity growth. Finally, the most recent data indicate that after a decade of almost continuous slowdown, Europe’s productivity performance is actually beginning to strengthen, in part due to the pro-cyclicality of productivity. If investment and business spending on digitisation persist, the uptick in labour productivity could translate into better total factor productivity growth, a measure of efﬁciency which identiﬁes possible spillovers from new technologies and innovation.
Authors: Bart van Ark, Klaas de Vries, Kirsten Jäger, Cecilia Jona-Lasinio, Valentina Meliciani, Nicholas Oulton, Alexander Herzog-Stein, Gustav A. Horn, Davide Castellani, Mariacristina Piva, Torben Schubert, Marco Vivarelli, Guntram B. Wolff, Caroline Fredrickson
By Bart van Ark, Klaas de Vries and Kirsten Jäger
By Cecilia Jona-Lasinio and Valentina Meliciani
By Nicholas Oulton
By Alexander Herzog-Stein and Gustav A. Horn
By Davide Castellani, Mariacristina Piva, Torben Schubert and Marco Vivarelli
By Guntram B. Wolff
By Caroline Fredrickson