Identifying the Main Drivers of Productivity Growth
A Literature Review
This report represents the second outcome of the collaboration between the Asian Productivity Organization (APO) and the Organisation for Economic Co-operation and Development (OECD) to improve the measurement and analysis of productivity developments across APO and OECD member economies. The report discusses the potential impact of COVID-19 on productivity and examines the role of Multifactor Productivity (MFP) as a major driver of economic growth and changes in living standards. It then identifies the most important factors influencing MFP growth and describes the most important challenges affecting the measurement of each of these factors as well as the estimation of their impact on MFP. The report provides key recommendations to improve the reliability and interpretation of the empirical evidence for economic analysis.
Preface by the Organisation for Economic Co-operation and Development
Productivity growth is a central driver of long-term economic growth and living standards but, in recent years, its contribution to growth has declined significantly in most countries. The COVID-19 crisis has not helped, as heightened uncertainty has impacted investment, and slowed or even reverted the pace of globalisation. However, the crisis has also accelerated the digitalisation of economies, potentially boosting productivity. Reigniting the productivity engine is more important than ever if economies are to achieve sustainable, inclusive and resilient growth. To move in this direction, it is key to understand the role of productivity in economic growth as well as the underlying driving forces.
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