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.
The impact of the COVID-19 crisis on productivity in the short and the long term
The pandemic triggered the most severe and abrupt global recession since the end of the Second World War. Concerns have risen that this would lead to a pronounced and long-standing fall in productivity growth. As productivity growth rates in many OECD and APO economies had been declining prior to the pandemic, the downturn could potentially drive productivity growth into zero or negative territory, lowering living standards. Rising uncertainties from the war in Ukraine and enhanced geo-political tensions have intensified those concerns. This chapter seeks to review the potential impact of the COVID-19 crisis on productivity in the short and long term, drawing on recent data and insights from the economic literature. Given the large uncertainties surrounding the pace of the recovery, the analysis remains explorative.
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