Global Productivity

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CHAPTER 2

GLOBAL PRODUCTIVITY

FIGURE 2.11 Post-GFC slowdown of the drivers of productivity growth In EMDEs, improvements in a broad range of productivity drivers slowed after 2008. Investment growth slowed to one-third of its pre-GFC rate in EMDEs. Working-age population shares are expected to contract in coming years. The growth of educational attainment has also slowed.

A. EMDEs with a slowdown in productivity drivers in the post-GFC period

B. Average investment growth Percent 12

Percent 100 75 50 25 0

1980s

1990s

2003-08

2013-18

10 8

Institutions

Education

Income equality Econ. complexity

Urban

Gender equality

Innovation

Demography

Investment

6

C. Change in working-age population shares

0 EMDEs

EMDE commodity EMDE commodity exporters importers

Percent

1980s 2003-08

4

1990s 2013-18

3 2

2020-25

2015-20

2010-15

2005-10

1 2000-05

1995-2000

1990-95

2

D. Average growth in educational attainment

Advanced economies EMDEs

Percentage points 4 3 2 1 0 -1 -2

4

0 EMDEs

EMDE commodity exporters

EMDE commodity importers

Sources: Barro and Lee (2015); International Monetary Fund; Observatory of Economic Complexity; Penn World Table; World Bank, World Development Indicators; IMF World Economic Outlook; United Nations; Wittgenstein Centre for Demography and Global Human Capital.

Note: EMDEs = emerging market and developing economies; GFC = global financial crisis.

A. Share of economies where improvements in each driver of productivity during 2008-18 are lower than those in the pre-GFC period 1998-2007. The following variables correspond to each concept (sample in parentheses): Institutions (75) = Worldwide Governance Indicators Government Effectiveness Index; Innovation (27) = patents per capita; Investment (69) = investment-to-GDP ratio; Income equality (73) = (-1)*Gini coefficient; Urbanization (75) = Urban population share; ECI (56) = Economic Complexity Index of Hidalgo and Hausmann (2009); Education (52) = years of schooling; Gender equality = ratio of years of schooling of female to male; Demography (75) = share of working-age population.

B. GDP-weighted average annual investment (gross fixed capital formation) growth.

C. Five-year average percentage point changes in the share of the working-age population (aged 15-64).

D. GDP-weighted average changes in years of education.

scope for longer-term effects also (table 2.2). This section sketches how preexisting trends and the pandemic will shape the outlook for productivity growth, while acknowledging that many effects remain uncertain.

Lasting impact of COVID-19. Many productivity drivers are expected to be negatively affected by the pandemic. Uncertainty about the duration of the pandemic and the global economic landscape may discourage investment (Bloom 2014). Concerns about their long-term viability and resilience may lead to a retreat from global value chains— which would choke off an important channel for international technology