New Publication Alert: Measuring Productivity and Convergence Across Countries and Sectors, published in Bulletin of Economic Research. https://doi.org/10.1111/boer.12492
This paper dives into the evolution of Total Factor Productivity (TFP) growth across 13 OECD countries from 1995 to 2017. Using detailed industry-level EU KLEMS data and a modern estimation method (Ackerberg et al., 2015), I uncover how productivity varies not just between countries, but also across sectors.
Key takeaway? TFP growth is sluggish overall—but it’s not the same story everywhere. Even within Europe, there are “two speeds”: some countries are catching up, while others lag behind. Notably, the US and UK haven’t regained their 2000s momentum, and Japan shows a very different growth path altogether.
A closer look reveals that each country’s productivity story is driven by different sectors. Germany’s gains come mainly from manufacturing, while the Netherlands’ drag stems from agriculture. This makes sector-level analysis essential for understanding the bigger picture.
Interestingly, I find signs of convergence—countries and sectors slowly closing the productivity gap. The services sector shows weaker convergence, but the trend is there. Why? Possibly because it’s easier to copy best practices when knowledge barriers are low—think legal systems, banking, tech, even management styles.
Still, this study focuses on labor and capital, and future research should consider other factors like management, effort, or capital utilization. Understanding what drives sectoral and cross-country differences is key to designing policies that promote inclusive growth.
Mara E. Vidali 