Automation, Productivity, and Growth

Economic stagnation or weak growth exacerbates poverty.

In the non tradable sector (60 70 of the economy in advanced countries), the main growth inhibitors are weak demand, as in the United States following the financial crisis, and structural and competitive impediments to productivity, as in Japan. In the tradable sector, growth depends on a country s productivity relative to incomes and competitiveness.

But it is impeded by slow growth and, thanks to high unemployment and weak global demand, persistently low inflation. Worse, over the longer term, low investment undermines productivity, while protracted unemployment destroys skills.

The productivity record has generally been weak over the last few years, and this suggests that growth in the years ahead could be slower than previously expected. Revenue growth thus looks insufficient to match the surge in age related public spending on health and pensions.

However, rapid import liberalization will have difficulty in enhancing productivity and promoting competitiveness when the industrial structure is weak.

There is no escaping the key role that productivity growth plays in any country s economic performance. Yet, for advanced economies, periods of sustained rapid productivity growth have been the exception, not the rule.

NEW YORK Recent trends in productivity growth make it hard to be optimistic about the future. In 2014, the global growth of total factor productivity, or TFP, which measures the combined productivity of capital and labor, was essentially zero for the third consecutive year.

The country requires human and physical capital to raise productivity and achieve sustained growth.

In particular, they show that services have exhibited unconditional convergence in productivity recently. That is, countries furthest away from the global frontier of labor productivity have seen the fastest productivity growth in services.

However, overall performance in terms of investment, value added and productivity growth was often quite weak Premature deindustrializers This group included most countries in Latin America, which had achieved a certain degree of industrialization but were unable to sustain a dynamic process of structural change through rapid accumulation and growth.

Persistently weak labor productivity growth has created a situation in which unit labor costs do not fall, even if real wages remain stagnant or decline. Indeed, despite a 1.3 drop in real wages in 2011, unit labor costs remained unchanged.

Private and public debt levels are high and possibly unsustainable. After all, the loss of competitiveness that led to large external deficits remains largely unaddressed, while adverse demographic trends, weak productivity gains, and slow implementation of structural reforms depress potential growth.

The reduction of poverty as well as working poverty are also dependent on productivity growth.

Productivity growth stems from enhanced adaptive capabilities to use modern technology and commercialize new knowledge.

This structure contrasts with the pre 1980 business cycle, which rested on wage growth tied to productivity growth and full employment. Wage growth, rather than borrowing and financial booms, fuelled demand growth.

They facilitate technology transfer, create jobs, boost productivity, enhance competitiveness, accelerate economic growth and eliminate poverty.

Overall, productivity per worker, which is the major component of growth from within , has consistently declined.

Fostering growth and productivity is central to UNIDO's highly focused sectoral, regional and country specific programmes.

In that region, increases in agricultural productivity, reductions in population growth, improved governance and economic growth would together serve to reduce poverty and hunger.

Business services are knowledge intensive, allow for technology diffusion and are an important source of productivity growth.

What can be said is that rapid import liberalization will have difficulty in enhancing productivity and promoting competitiveness when the industrial structure is weak.

But it also has stagnant wages, busted banks, inadequate investment, weak productivity gains, dismal demographics, and anemic output growth. Its beggar thy neighbor economic model suppressing wages to subsidize exports should not serve as an example for the rest of the eurozone to follow.

MILAN The world is facing the prospect of an extended period of weak economic growth. But risk is not fate The best way to avoid such an outcome is to figure out how to channel large pools of savings into productivity enhancing public sector investment.

Over the past three decades, the US has been able to grow at an average annual rate of around 2.5 . Some attribute relatively slow growth to demographic factors, which have reduced the labor force, as well as to weak productivity levels, which have been low.

For this approach, the relatively low level and declining share of FDI flows to Africa are taken as symptomatic of the region's weak investment climate, and as a principal reason why its growth performance labours under a narrow export base and low productivity levels.

Of course, not everyone can gain share at the same time. Fortunately, if countries increase productivity with the aim of boosting relative productivity and growth potential on the tradable side, this will increase incomes and accelerate the growth of global aggregate demand.

Indeed, the determinants of long run economic growth were manifold and the correct degree of policy intervention to encourage productivity growth still needed to be investigated.

Such reforms are essential to raise productivity growth and improve the Japanese economy s competitiveness. Four imperatives stand out.

OECD also developed several new manuals, such as Measuring productivity OECD manual Measurement of aggregate and industry level productivity growth in 2001 and OECD handbook on economic globalization indicators in 2005.

Governments, however, need to understand the barriers to investment regulatory failures weak enablers, including financial and human capital poor infrastructure and substandard technology. And they must undertake rigorous cost benefit analyses, in order to ensure that any intervention translates into private investment that promotes productivity growth.

A sustainable improvement in export performance requires not only productivity growth based on rising investment rates, but also policies that ensure that real wages do not increase faster than productivity growth, and that the exchange rate is maintained at a stable and competitive level.

A sustainable improvement in export performance requires not only productivity growth based on rising investment rates, but also policies that ensure that real wages do not increase faster than productivity growth, and that the exchange rate is maintained at a stable and competitive level.

The main culprit behind the languishing fortunes of America s middle class is slow wage growth. After peaking in the early 1970s, real (inflation adjusted) median earnings of full time workers aged 25 64 stagnated, partly owing to a slowdown in productivity growth and partly because of a yawning gap between productivity and wage growth.

Higher investment in the US by both domestic and foreign companies would boost economic growth, while the resulting increase in capital new businesses, factories, equipment, and research would improve productivity. That should, in turn, boost real wages over time (although the link between productivity growth and wage growth has weakened during the last two decades).

To reclaim its promise, India must foster a new generation of productivity growth. The time for action is now.

Higher investment in the US by both domestic and foreign companies would boost economic growth, while the resulting increase in capital 160 new businesses, factories, equipment, and research would improve productivity. That should, in turn, boost real wages over time (although the link between productivity growth and wage growth has weakened during the last two decades).

It would require restraint in Spain, where wages grew at an average annual rate of 3.4 in 2000 2010, as well as a serious effort to accelerate productivity growth. But it would not require falling wages or significant price deflation annual wage growth of 1.7 and productivity growth of 2 would be compatible with inflation close to zero.

After Sweden eased planning laws in its retail sector during the 1990 s, the country posted the strongest retail productivity growth in Europe (and outstripped that of the United States) between 1995 and 2005. Standardization and liberalization in European telecoms underpinned 9 growth in value added and productivity in this period, compared to 6 growth in the US.

The production sectors suffer from low productivity and weak competitiveness, due mainly to the inefficient use of resources, insufficient networking and clustering and poor use of technology.

Soon, growth and productivity follow, spurring more innovation and efficiency, bringing the products and services that people want and need.

Reaffirming that investing in the development of women and girls has multiplier effects on productivity, efficiency and sustained economic growth,

There can be two types of improvement in productivity productivity growth based on high and rising rates of investment associated with rising employment and a one off increase in labour productivity associated with static efficiency gains resulting from labour shedding under conditions of stagnant or declining investment.

This endogenous response to rapid productivity growth was a key factor contributing to the savings glut. Old development verities that savings drive growth had to be re assessed, because, to some extent, emerging market growth drove savings.

America provided China with both stability and growth anchors. China enabled the US to sidestep the mounting perils of subpar saving, reckless fiscal policy, and weak household income growth.