Working Paper: CEPR ID: DP17452
Authors: John Fernald; Mehrdad Esfahani; Bart Hobijn
Abstract: We use a new growth accounting method to quantify the drivers of world total factor productivity (TFP) growth during 1996-2014 and uncover four main results. World productivity growth is volatile from year to year. This mainly reflects reallocation of labor across country-industries. The contribution of country-industry level productivity growth to world productivity is relatively constant over time. This constancy masks that the increased importance of emerging economies offset a productivity slowdown in advanced economies; after 2008, this offsetting effect dissipated and world TFP growth declined. These conclusions are robust to the inclusion of markups in the analysis.
Keywords: growth accounting; productivity; world economy
JEL Codes: F43; O47; O50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Labor reallocation from low-wage to higher-wage country-industries (F16) | World productivity growth (O49) |
| Increased labor in low-wage industries (F66) | Overall productivity growth (O49) |
| Country-industry level productivity growth (O49) | World productivity growth (O49) |
| Productivity slowdown in advanced economies post-2008 (O49) | Decline in world TFP growth (O49) |
| Increased productivity growth in emerging economies (O49) | Counterbalance productivity slowdown in advanced economies (O49) |
| Markups (Y10) | Productivity (O49) |