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The Future of Productivity

Catherine L. Mann, OECD Chief Economist
SAIS Europe
November 26, 2015

Catherine L. Mann reflects upon the future of global productivity to determine the appropriate policy instruments OECD countries can implement to overcome inhibitors of productivity growth. Mann breaks down data that illustrate a recent productivity slowdown to conclude that productivity growth has stagnated less so on the global economic “frontier,” (amongst the 100 firms leading in productivity, productivity growth from 2001-2009 stands at 3.5% for manufacturing and 5% for services) than amongst nationally advanced and laggard firms (who have experienced 0.5% productivity growth in manufacturing and -0.1% in services). The rising gap between frontier firms and laggard firms challenges pessimistic outlooks on the inherently limited potential of modern innovations to inspire growth by suggesting that it is actually the lack of diffusion of such innovations lowering aggregate productivity. In order to spread the use of frontier methods and management technologies as well as their accompanying gains throughout the global economy, policy (as uniquely designed for each country) should prioritize easing of rigidities in factor markets; strengthening of global economic linkages; improvements in legal frameworks; and improving knowledge-based capital.

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