PRODUCTION AND • PRODUCTIVITY

PRODUCTIVITY AND GROWTH ACCOUNTING

Economic growth can be increased either by raising the the overall function, age-efficiency profiles, labour and inputs used in production, or by greater depreciation rates, lives and harmonised ICT overall efficiency in how these inputs are used together, i.e. investment deflators. higher multi-factor productivity (MFP). Growth accounting MFP is typically perceived as the general efficiency with involves breaking down GDP growth into the contribution which inputs are used together to produce output. To a of labour inputs, capital inputs and multi-factor large extent, MFP captures disembodied technological productivity (MFP) growth. change, resulting from scientific knowledge and its diffusion, management and organisational change, and Definition spill-over effects. However, due to the assumptions used in the growth accounting model and data constraints in Multi-factor productivity (MFP) growth is the residual part measuring the inputs, MFP also captures a number of other of GDP growth that cannot be explained by growth in either factors, such as variations in capacity utilisation and other labour or capital input. The contribution of labour (capital) cyclical effects, imperfect , changes in the to GDP growth is measured as the speed with which labour skills composition of the workforce, returns from (capital) input grows, multiplied by the share of labour intangible assets not yet incorporated in capital services, (capital) in total costs. and errors in the measurement of input and output. In the tables and graphs, the contribution of capital to GDP growth is broken down into Information and Communication Technologies (ICT) and non-ICT capital. ICT capital covers hardware, communication and software. Non-ICT capital covers transport equipment and non- residential construction; products of agriculture, metal products and machinery other than hardware and communication equipment; and other products of non- residential gross fixed .

Comparability The appropriate measure for capital input in the growth accounting framework is the flow of productive services that can be drawn from the cumulative stock of past investments in capital assets. To ensure cross-country comparability of capital services and MFP data, the OECD Secretariat uses the same assumptions for all countries for Sources • OECD (2013), OECD Productivity Statistics (Database). Further information Overview Analytical publications While averages for the period 2000-11 mask volatility in • OECD (2004), Understanding : A Macro-level, growth drivers over time, GDP growth, over the period, Industry-level, and Firm-level Perspective, OECD Publishing. was in large part driven by growth in capital and MFP in • OECD (2003), The Sources of Economic Growth in most OECD countries. ICT capital services contributed OECD Countries, OECD Publishing. between 0.2 and 0.7 percentage points of GDP growth, Statistical publications with the largest contributions in the United Kingdom, • OECD (2013), OECD Compendium of Productivity Indicators Denmark and Australia, and the smallest in Finland, 2013, OECD Publishing. Germany and Italy. The contribution of non-ICT capital Methodological publications was the largest driver of GDP growth in Spain, Portugal, • OECD (2009), Measuring Capital, OECD Manual, Second the Netherlands and Italy. Over the same period, the edition, OECD Publishing. contribution of labour input was significant in • OECD (2001), Measuring Productivity – OECD Manual: Australia, New Zealand and Canada, while in Japan, Measurement of Aggregate and Industry-level Productivity Portugal, Korea, the United States, Ireland and Growth, OECD Publishing. Denmark labour input had a negative impact on GDP growth. From 2000 to 2011, MFP growth was a • Schreyer, P. (2004), “Capital Stocks, Capital Services and significant source of GDP growth in Korea, Ireland and Multi-factor Productivity Measures”, OECD Economic Sweden, while Italy, Denmark, Portugal, Belgium and Studies, Vol. 2003/2. Spain recorded negative MFP growth. Websites • Productivity statistics, www..org/statistics/productivity.

44 OECD FACTBOOK 2014 © OECD 2014 PRODUCTION AND PRODUCTIVITY • PRODUCTIVITY

PRODUCTIVITY AND GROWTH ACCOUNTING

Contributions to GDP growth Average annual growth in percentage, 2000-11 (or closest comparable year)

ICT capital Multi-factor Labour input Telecommunication Non-ICT capital GDP growth IT equipment Software Total productivity equipment Australia 1.50 0.30 0.10 0.10 0.51 0.73 0.52 3.27 Austria 0.14 0.10 0.08 0.16 0.34 0.30 0.80 1.58 Belgium 0.82 0.26 0.04 0.12 0.43 0.35 -0.18 1.42 Canada 0.98 0.19 0.08 0.10 0.36 0.47 0.09 1.90 Chile ...... Czech Republic ...... Denmark -0.12 0.38 0.02 0.15 0.55 0.41 -0.22 0.63 Estonia ...... Finland 0.37 0.05 0.05 0.14 0.24 0.23 0.93 1.74 France 0.18 0.08 0.04 0.16 0.28 0.34 0.38 1.18 Germany 0.00 0.12 0.04 0.06 0.22 0.16 0.76 1.12 Greece ...... Hungary ...... Iceland ...... Ireland -0.14 0.16 0.05 0.09 0.30 0.83 1.48 2.47 Israel ...... Italy 0.18 0.10 0.06 0.06 0.21 0.39 -0.44 0.34 Japan -0.49 0.19 0.05 0.18 0.41 -0.06 0.76 0.61 Korea -0.32 0.08 0.10 0.15 0.33 0.87 3.13 4.02 Luxembourg ...... Mexico ...... Netherlands 0.23 0.21 0.02 0.15 0.38 0.46 0.21 1.28 New Zealand 1.21 0.19 0.17 0.13 0.48 0.41 0.08 2.19 Norway ...... Poland ...... Portugal -0.35 0.21 0.10 0.11 0.43 0.77 -0.19 0.67 Slovak Republic ...... Slovenia ...... Spain 0.71 0.11 0.13 0.14 0.38 0.84 -0.07 1.85 Sweden 0.45 0.17 0.01 0.25 0.44 0.32 1.03 2.23 Switzerland 0.72 0.12 0.10 0.17 0.39 0.18 0.42 1.70 Turkey ...... United Kingdom 0.20 0.31 0.10 0.24 0.65 0.37 0.52 1.72 United States -0.23 0.15 0.08 0.14 0.36 0.22 1.27 1.63 EU 28 ...... OECD ...... Brazil ...... China ...... India ...... Indonesia ...... Russian Federation ...... South Africa ......

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Contributions to GDP growth Average annual growth in percentage, 2000-11 (or closest comparable year)

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OECD FACTBOOK 2014 © OECD 2014 45 From: OECD Factbook 2014 Economic, Environmental and Social Statistics

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OECD (2014), “Productivity and growth accounting”, in OECD Factbook 2014: Economic, Environmental and Social Statistics, OECD Publishing, Paris.

DOI: https://doi.org/10.1787/factbook-2014-15-en

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