Global Productivity: Trends, Drivers, and Policies

Warwick McKibbin,R. Inklaar

Published 2021 in Unknown venue

ABSTRACT

• The COVID-19 pandemic compounds the broad-based slowdown in global labor productivity growth that has been underway over the past decade. Labor productivity in the average emerging market and developing economy (EMDE) was less than one-fifth of the advanced-economy average in 2013-18. • In EMDEs, the slowdown has reflected weaker investment and efficiency gains; dwindling sectoral reallocation; slowing improvements in key drivers of productivity; and adverse shocks such as natural disasters, epidemics, wars, and financial crises. • COVID-19 may slow productivity growth further through multiple channels, including lower investment, erosion of human capital because of unemployment and loss of schooling, and a retreat from global trade and supply chains. • To rekindle productivity growth, a comprehensive approach is necessary. This includes policies to facilitate investment in physical and human capital; encourage reallocation of resources toward more productive sectors and enterprises; foster firm capabilities to reinvigorate technology adoption and innovation; and promote an inclusive, sustainable, and growth-friendly macroeconomic and institutional environment.

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