CEPR Research and Policy Network (RPN) on European ... productivity_nicoletti_final.pdf · Giuseppe...

PRODUCTIVITY IN THE EURO AREA: A (SAD) STORY IN FOUR ACTS

Giuseppe NicolettiStructural Policy Analysis Division, Economics Department, OECD

CEPR Research and Policy Network (RPN) on European Economic Architecture Monday 15 - Tuesday 16 April 2019Collège de France, Paris

Session 2 - What holds back productivity growth in euro area countries?

The four acts

• The missing services

• The burden of laggards

• The digital deficit

• A sick man: Italy

EU services: missing in action?

Labour productivity growth by macro-sector, US vs EA

-0.5

0

0.5

1

1.5

2

2.5

United States Euro Area United States Euro Area United States Euro Area

2001-2008 2009-2016 2011-2016

Manufacturing Business sector services

Note: Growth in value-added per employee, OECD Productivity Database

1

UPDATE: update + focus on EA OLD

Average annual industry contribution to business sector labour productivity growth (employment based)

Average annual industry contribution to business sector labour productivity growth (employment based)

ManufacturingBusiness sector servicesManufacturingBusiness sector services

2001-2008United States0.9352728751.038189752001-2007United States1.09680685711.3220135714

Euro Area0.63470350.267675625EU280.83709171430.7040362857

2009-2016United States0.1401686250.8584871252008-2015United States0.1177218750.74303175

Euro Area0.58751250.04779275EU280.4213646250.0660315

2011-2016United States-0.05762366670.66230452011-2015United States-0.07102460.7253404

Euro Area0.6583110.23577EU280.53374220.4049988

Dataset: Productivity and ULC by main economic activity (ISIC Rev.4)SubjectIndustry contribution to business sector labour productivity; employment based

SubjectIndustry contribution to business sector labour productivity; employment basedActivityC: ManufacturingGNEXCL: Business sector services excluding real estate

MeasureAnnual industry contribution, percentage pointsUnited States20010.31.91.101.32

UnitPercentage20021.61.6

ActivityC: ManufacturingGNEXCL: Business sector services excluding real estate20031.51.1

CountryTime20041.91.9

United States20010.41.90.93531.038220050.71.9

20021.61.520060.91.0

20031.51.020070.8-0.0

20041.91.82008-0.2 -0.5 0.120.74

20050.71.920090.20.6

20060.90.920101.22.2

20070.8-0.1 2011-0.2 0.4-0.07 0.73

2008-0.2 -0.6 2012-0.3 0.6

20090.20.70.14020.858520130.20.4

20101.22.22014-0.0 0.9

2011-0.2 0.4-0.0576 0.662320150.01.4

2012-0.3 0.5European Union (28 countries)20010.50.80.840.70

20130.20.420020.40.3

20140.11.120030.70.4

2015-0.1 2.020041.10.5

20160.0-0.4 20050.80.8

Euro area (19 countries)20010.40.60.63470.267720061.41.1

20020.3-0.1 20070.91.1

20030.6-0.4 2008-0.6 -0.4 0.420.07

20041.20.32009-1.7 -2.1

20050.80.320103.01.1

20061.60.720111.10.80.530.40

20071.00.92012-0.3 0.1

2008-0.7 -0.2 20130.20.4

2009-2.3 -1.9 0.58750.047820140.80.3

20103.10.920150.90.4

20111.20.80.65830.2358

2012-0.4 -0.1

20130.20.2

20141.00.3

20151.20.3

20160.8-0.1

20170.70.4

ManufacturingUnited StatesEU28United StatesEU28United StatesEU282001-20072008-20152011-20151.09680685714285730.837091714285714270.117721875000000020.42136462499999999-7.1024599999999993E-20.53374219999999994Business sector servicesUnited StatesEU28United StatesEU28United StatesEU282001-20072008-20152011-20151.32201357142857170.704036285714285670.74303175000000016.6031499999999993E-20.72534040.40499879999999999ManufacturingUnited StatesEuro AreaUnited StatesEuro AreaUnited StatesEuro Area2001-20082009-20162011-20160.9352728750.634703499999999980.140168624999999960.58751249999999988-5.7623666666666656E-20.65831099999999998Business sector servicesUnited StatesEuro AreaUnited StatesEuro AreaUnited StatesEuro Area2001-20082009-20162011-20161.03818975000000010.267675625000000030.858487124999999914.7792749999999988E-20.662304499999999960.23576999999999995


Labour productivity growth by macro-sector, US vs EU


2

UPDATE: update + focus on EAOLD

Industry contribution to business sector productivity growth

Sector contribution to business sector productivity growthReal gross value added per hour worked, percentage point contribution at annual rate

Real gross value added per hour worked, percentage point contribution at annual reate, OECD Productivity Database

Sector contribution to business sector productivity growth

Real gross value added per hour worked, percentage point contribution at annual reate, OECD Productivity Database

Source: Note: Business sector services cover distributive trade, repair, accomodation, food and transport services; information and communication; financial and insurance; professional; scientific and support activities.

OECD Productivity Statistics (database), February 2018.

Source:

OECD Productivity Statistics (database), April 2017.

Link to source data: http://dx.doi.org/10.1787/8889337339992001-20152001-20072009-2015

2001-20162001-20072010-2016ManufacturingBusiness sector services excluding real estateManufacturingBusiness sector services excluding real estateManufacturingBusiness sector services excluding real estate

ManufacturingBusiness sector services excluding real estateManufacturingBusiness sector services excluding real estateManufacturingBusiness sector services excluding real estate1continentalContinental, UK and Ireland100.00

1 Continental, UK, IRLContinental, UK and IrelandIRL1.651.812.021.471.882.1220143.49United Kingdom1continentalGBR0.391.031.42United KingdomGBR0.782.212.98United KingdomGBR0.160.540.70

1 Continental, UK, IRLAUT0.680.581.171.060.570.122.22Ireland1continentalIRL0.971.482.442014IrelandIRL1.571.362.93IrelandIRL0.741.742.482014

1 Continental, UK, IRLBEL0.720.491.041.140.590.062.18Austria1continentalAUT0.710.681.39AustriaAUT1.131.092.22AustriaAUT0.860.241.10

1 Continental, UK, IRLLUX0.080.610.421.640.260.152.06Denmark1continentalDNK0.730.911.64DenmarkDNK0.711.492.20DenmarkDNK1.000.911.92

1 Continental, UK, IRLNLD0.400.680.811.100.270.411.91Belgium1continentalBEL0.760.491.25BelgiumBEL1.041.122.16BelgiumBEL0.850.231.08

1 Continental, UK, IRLDEU0.790.331.290.500.650.701.79Netherlands1continentalNLD0.390.741.13NetherlandsNLD0.811.101.91NetherlandsNLD0.370.721.09

1 Continental, UK, IRLFRA0.520.520.800.820.390.571.62France1continentalFRA0.560.641.20FranceFRA0.871.021.89FranceFRA0.500.661.16

NordicGermany1continentalDEU0.760.331.09GermanyDEU1.290.501.79GermanyDEU1.340.591.93

2 NordicFIN0.770.322.590.54-0.170.373.13 1continental -100

2nordicNordic100.00

3 SouthernSouthernGRC0.19-0.820.202.150.56-3.042.35Sweden2nordicSWE1.271.382.65SwedenSWE2.302.014.31SwedenSWE1.251.522.77

3 SouthernPRT0.590.350.910.750.22-0.101.66Finland2nordicFIN0.740.371.10FinlandFIN2.590.543.13FinlandFIN0.130.730.86

3 SouthernESP0.460.150.56-0.210.570.640.35Norway2nordicNOR0.310.670.98NorwayNOR0.281.111.39NorwayNOR0.330.560.88

3 SouthernITA0.31-0.170.35-0.140.32-0.150.222nordic-100.00

Eastern3southernSouthern100.00

4 EasternLVA0.932.471.415.810.381.857.22Greece3southernGRC0.06-0.45-0.39GreeceGRC0.202.152.35GreeceGRC0.12-2.61-2.49

4 EasternEST1.141.941.765.180.300.536.94Portugal3southernPRT0.630.491.12PortugalPRT0.910.751.66PortugalPRT0.530.350.88

4 EasternLTU1.541.801.993.170.881.545.16Spain3southernESP0.480.170.65SpainESP0.56-0.210.35SpainESP0.630.841.47

4 EasternSVK2.690.653.751.041.780.424.79Italy3southernITA0.34-0.130.21ItalyITA0.35-0.140.22ItalyITA0.770.190.96

4 EasternSVN1.330.612.391.340.640.733.733southern-100.00

4easternEastern100.00

5 EA Euro Area0.650.320.900.430.630.491.33Latvia4easternLVA1.002.543.54LatviaLVA1.415.817.22LatviaLVA0.791.792.58

AUS0.201.110.251.270.101.222015Estonia4easternEST1.271.993.26EstoniaEST1.765.186.94EstoniaEST1.080.781.85

CANERROR:#N/AERROR:#N/AERROR:#N/AERROR:#N/A0.410.792014Czech Republic4easternCZE2.041.143.18Czech RepublicCZE3.202.155.35Czech RepublicCZE1.271.162.43

CHEERROR:#N/AERROR:#N/AERROR:#N/AERROR:#N/AERROR:#N/A0.50Lithuania4easternLTU1.711.953.66LithuaniaLTU1.993.175.16LithuaniaLTU1.611.943.55

CRI0.452.830.701.28-0.254.202015Hungary4easternHUN1.800.962.76HungaryHUN2.951.894.84HungaryHUN1.930.952.88

CZE1.941.093.202.130.791.01Slovak Republic4easternSVK2.760.693.45Slovak RepublicSVK3.751.044.79Slovak RepublicSVK2.650.653.30

DNK0.710.830.711.490.710.44Slovenia4easternSVN1.330.581.91SloveniaSVN2.391.343.73SloveniaSVN0.920.801.72

EU280.640.520.900.840.490.57Poland4easternPOL1.781.152.92PolandPOL2.171.073.25PolandPOL1.411.272.69

GBR0.370.940.782.160.040.284eastern-100.00

HUN1.690.852.951.900.89-0.36European UnionEU28 EU280.660.531.19European UnionEU280.890.871.76European UnionEU280.890.691.57

ISR0.671.181.000.920.122.29

JPN0.850.251.420.590.520.54LuxembourgLUX0.060.770.83LuxembourgLUX0.321.842.15LuxembourgLUX0.361.251.62

KOR1.990.913.300.701.010.342004-15AustraliaAUS0.240.941.182011AustraliaAUS0.231.111.34AustraliaAUS0.270.891.162011

NOR0.290.640.281.120.170.45IsraelISR0.601.161.77IsraelISR0.880.901.78IsraelISR0.552.152.70

POL1.631.282.171.070.711.47Costa RicaCRI0.542.833.37Costa RicaCRI0.701.281.98Costa RicaCRI0.644.715.35

SWE1.121.502.302.010.131.95KoreaKOR2.121.663.782004-15KoreaKOR3.522.315.832004-07KoreaKOR1.641.212.85

USA0.590.951.221.22-0.070.722015CanadaCANERROR:#N/AERROR:#N/AERROR:#N/ACanadaCANERROR:#N/AERROR:#N/AERROR:#N/ACanadaCAN0.370.530.902013

Euro areaEAEA190.650.351.01Euro areaEA190.900.471.36EA19EA190.970.611.58

2001-2007

ManufacturingGBRIRLAUTDNKBELNLDFRADEU SWEFINNORGRCPRTESPITALVAESTCZELTUHUNSVKSVNPOLEU28Continental, UK and IrelandNordicSouthernEastern 0.77822754770910941.56953265802073361.12613855216672220.705589898564640271.04428848558386630.81051062470069990.874779127851432751.29295296665026262.30389358445812762.59288675914515210.279706613666008690.204510238578436980.913020744839543320.556419192446067080.352947038227480191.40881072161431751.76338150319099723.19691786446483221.99301120949049172.95009222859679013.74720287669632062.3925152133968732.17491397529869790.8912587741682243Business sector services excluding real estateGBRIRLAUTDNKBELNLDFRADEU SWEFINNORGRCPRTESPITALVAESTCZELTUHUNSVKSVNPOLEU28Continental, UK and IrelandNordicSouthernEastern 2.20561594657537881.36417993032256211.09462562082232041.49404281711453811.11667520436908861.1005852770407111.01844371991530740.500183725863023732.01023653129912550.541169498177929141.10881608343564862.14855385248839960.74504584728940504-0.20832454796606559-0.136930463997830825.80677847427157895.17801822642141032.15264166032034243.16791712561312891.89461318952603991.04211991960405651.33795638849814051.07386552575974290.87228852027048109

2009-2015

ManufacturingGBRIRLAUTDNKBELNLDFRADEU SWEFINNORGRCPRTESPITALVAESTCZELTUHUNSVKSVNPOLEU28Continental, UK and IrelandNordicSouthernEastern 0.1634085786265560.744482397485102250.863082331278319791.00322366529250750.845154041407147890.367365055304369470.500976495187921421.34036470464611311.24968223826094070.127595494208221360.327040129507460970.124933058706555580.531835195523067130.630914757750167250.772442939331186020.791146139982612521.07722918420007921.27132175874236091.60991175119722391.93320376222934082.65227569246535570.917597912727030621.41423076229045820.8879428750676599Business sector services excluding real estateGBRIRLAUTDNKBELNLDFRADEU SWEFINNORGRCPRTESPITALVAESTCZELTUHUNSVKSVNPOLEU28Continental, UK and IrelandNordicSouthernEastern 0.53534681555142961.73646501126898390.241629522493713720.911843182376825820.231517603280195770.724166019919025850.655200949267720210.594201380853442981.52358278020168210.731510364122089920.55787918482435028-2.61218258518072230.347504268965215250.835597563978529580.188165393458206151.79034166591709450.77753837341121291.16246838333224911.93967581823408790.950211772539510950.646187020625466070.801930021156271881.27371813138450470.68500759056011606

2001-2007

ManufacturingIRLAUTBELLUXNLDDEUFRAFINGRCPRTESPITALVAESTLTUSVKSVNEuro AreaContinental, UK and IrelandNordicSouthernEastern 2.01547573787659311.16674736615003381.04327635797147880.421454152548550450.81051062470069991.29295296665026260.802332378198711282.59288675914515210.204510238578436980.913020744839543320.556419192446067080.352948215474357951.40879357423024931.76338150319099721.99301120949049173.74720287669632062.3925152133968730.89502940024226429Business sector services excluding real estateIRLAUTBELLUXNLDDEUFRAFINGRCPRTESPITALVAESTLTUSVKSVNEuro AreaContinental, UK and IrelandNordicSouthernEastern 1.47021859781608641.05542737687456261.1377807569662891.6361908662717141.1005852770407110.500183725863023730.818579943336783520.541169498177929142.14855385248839960.74504567761803919-0.20833592994451422-0.136933075846423785.80797636286829465.17801822642141033.16791712561312891.04211991960405651.33795638849814050.43466801721334658

2010-2016

ManufacturingIRLAUTBELLUXNLDDEUFRAFINGRCPRTESPITALVAESTLTUSVKSVNEuro AreaContinental, UK and IrelandNordicSouthernEastern 1.87884891243068620.574476934946077660.589175453473633760.255661592063494150.268503429964761510.650981187626098470.39485042832125838-0.172314268072681910.558299321997912660.220994579315170190.574417261542237160.317828699345512610.379469725532288750.296135439019784560.877214119031299871.77719446543211920.644072250499294620.63027409721228Business sector services excluding real estateIRLAUTBELLUXNLDDEUFRAFINGRCPRTESPITALVAESTLTUSVKSVNEuro AreaContinental, UK and IrelandNordicSouthernEastern 2.12249410416442960.121917289911155366.2876953999002616E-20.151591036615794650.406837981119623220.700120620773181380.572389196360578720.37423168048320576-3.0409984463309558-9.6317814089708076E-20.64048664371494368-0.147939730637325351.8543919401780240.529553821341410821.54312178715889650.419009893524524560.734383309472796950.49351484408803881

3

UPDATE: keep only Spain and ItalyOLD

Excl. ESP and ITA

SpainItalyOtherAverage OECD

379879.12018095367.8479767479.80046827389.3953154204

383538.8353194588.1971164919.8510601288.9408541694

387188.53504371647.6581799229.6163020038.3835872814

390838.1974786777.181953359.54119852287.957775826

394487.66814127126.8046455889.46361148467.44146545

398147.54915536926.75914700189.69346343047.2222610088

401797.3166730946.3340717959.481153757.0517154636

405446.97991459585.85323547069.08998986126.7954374642

409096.7812415685.79419010188.82015312426.653266492

412756.5740781835.9406457358.65129236.663597732

Difference in capital growth between high and low productivity firms (%pts)

Spain379873835338718390833944839814401794054440909412759.12018095360000038.83531945800000078.53504371640000068.19747867700000127.66814127120000147.54915536920000027.31667309400000046.97991459580000046.78124156800000046.574078183000001Italy379873835338718390833944839814401794054440909412757.84797674700000068.19711649100000277.65817992199999957.18195335000000156.80464558800000056.75914700180000066.33407179499999985.85323547059999965.79419010180000085.940645735000003

Source: Adalet McGowan, M., D. Andrews and V. Millot (2017), “The Walking Dead? Zombie Firms and Productivity Performance in OECD countries”, OECD Economics Department Working Paper No. 1372.


Source: Adalet McGowan, M., D. Andrews and V. Millot (2017), “The Walking Dead? Zombie Firms and Productivity Performance in OECD countries”, OECD Economics Department Working Paper No. 1372.

4

UPDATE: update + focus on EAOLD

Average labour productivity

Panel B: Labour productivity (unweighted OECD average)

Note: *Unweighted average across 17 EA countries (excluding CYP and MLT). Labour productivity is computed as value added per person engaged, in constant USD PPP (base year 2005). Real estate is excluded from market services.

USEA

199620161996201619952015

Market services66.8232196.73238Market services50.6892265.75951Labour productivityMarket services53.854566.48061

Manufacturing94.02895196.0942Manufacturing59.97686137.6288Manufacturing61.26966109.7598

Market services1995201553.85450000000000266.480609999999999Manufacturing1995201561.269660000000002109.7598

United States


Euro Area*


5

UPDATE: focus on EA and USOLD

Productivity growth has been stronger in manufacturing than services

Labour productivity, annual growth rate (HP-filtered)

Panel A: Labour productivity, annual growth rate (HP-filtered)

ManufacturingServices

Notes: *EA aggregate is based on 17 countries in 1995-2015, 9 countries before 1995 and 15 countries in 2016 (due to data limitations). Labour productivity is computed as value added (in thousands of USD 2005 PPP) per person employed. Trends in labour productivity growth are obtained by smoothing productivity level annual time series with a HP filter (lambda=6.25)EU*OECD*USEU*OECD*US

1980

1981LP3.50154.201375.445670.872160.908261.07642

Source: OECD STAN database, OECD calculations.1982LP3.55734.208795.418440.902590.942711.06085

1983LP3.763754.368255.532420.984841.079991.12592

1984LP3.891154.210625.178781.082441.107161.01619

1985LP3.802673.827284.750721.121231.021360.81653

ManufacturingServices1986LP3.569633.406824.35261.147710.950580.66828

EA*USEA*US1987LP3.356193.064513.904271.196260.94030.62771

19801988LP3.117952.747163.289221.260111.090090.87941

19813.3639025.4456660.86651161.0764231989LP2.778072.499332.758521.236491.24751.23449

19823.4356535.4184360.90003571.0608481990LP2.515992.567472.66421.140651.362361.56742

19833.6791245.5324170.98233421.125921991LP2.560922.960742.961731.086581.468751.83541

19843.8725175.1787821.0874971.0161931992LP2.873743.5033.393381.157051.534671.9305

19853.8437964.7507211.1465950.81653231993LP3.20493.859543.664181.30951.501751.77416

19863.6387484.3525951.1885880.66827921994LP3.439593.977833.833871.433671.503781.67298

19873.4094093.904271.2363670.6277141995LP3.278843.823793.968481.455231.565681.74214

19883.1409543.2892211.2727230.87941221996LP2.994573.629384.224541.401441.6821.97199

19892.7805742.7585221.210261.2344851997LP2.938913.552934.562161.295261.769512.19886

19902.509732.6642011.071261.5674161998LP3.005283.569134.893071.164091.805922.36888

19912.551052.961730.99988281.8354151999LP3.186273.722795.304911.070951.834472.50925

19922.8834083.3933811.0672481.9305042000LP3.304093.867335.640441.032761.864172.63599

19933.2406113.6641821.2204041.7741582001LP3.223923.951895.985480.987621.877542.75925

19943.5184093.833871.330931.6729762002LP3.222484.25886.544990.924551.8312.74885

19953.4134443.9684751.3175091.7421422003LP3.328874.503056.692510.891341.720092.55958

19963.1400224.2245371.1874221.9719912004LP3.372074.445896.241780.871051.553172.26757

19972.9885074.5621550.99996262.1988622005LP3.131784.020745.469750.821481.336191.94605

19982.8576984.8930690.78111292.3688812006LP2.616763.377064.816680.683831.052421.60641

19992.8180895.3049090.60264542.5092542007LP1.784562.575424.208940.442750.78811.42047

20002.788195.6404410.49983312.6359922008LP1.063141.864363.638540.169590.626911.42182

20012.648945.9854790.42919942.7592492009LP1.094641.684053.226920.061990.652851.52362

20022.663716.5449890.35802092.7488482010LP1.936792.048032.621970.213770.811931.48119

20032.8727296.6925070.3465882.5595812011LP2.134351.902761.599990.365890.874481.18432

20043.0738996.2417790.40988112.2675682012LP1.912641.60520.826260.440.867870.88206

20052.9769115.4697480.47032151.946052013LP1.811851.411880.441110.479490.83350.69064

20062.5252914.8166790.46447861.6064112014LP1.811571.30740.203990.462580.794710.64112

20071.6656514.2089380.35523361.4204692015LP1.738411.203230.089020.434960.746850.61295

20080.85961833.6385450.17393411.4218182016LP1.666641.145150.079710.418370.693790.57173

20090.87839073.2269160.08933871.523619

20101.8599252.6219670.21262271.481192

20112.2841221.5999910.32374191.184325

20122.3051310.82625530.35613460.8820607

20132.4916580.44110730.36171050.6906376

20142.779140.20399420.31269120.6411215

20152.9047290.08901560.24497660.6129506

20162.8089590.07970570.20541980.5717276

Manufacturing

EU*19801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520163.50149999999999963.55730000000000013.76374999999999993.89115000000000013.80266999999999963.56963000000000013.35618999999999983.117952.778072.51598999999999992.56091999999999992.87374000000000023.20490000000000033.43958999999999993.27884000000000022.994572.93890999999999993.005283.18626999999999993.304093.22392000000000013.222483.32886999999999983.37206999999999993.131782.61675999999999981.78455999999999991.063141.09464000000000011.936792.134351.91264000000000011.811851.81156999999999991.738411.6666400000000001OECD*19801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520164.20136999999999984.20878999999999964.36824999999999974.21062000000000053.82728000000000053.40682000000000023.06451000000000032.747162.49933000000000012.56747000000000012.96073999999999993.50299999999999973.859543.97783000000000043.82378999999999983.62938000000000033.55292999999999993.56913000000000043.72279000000000033.86732999999999993.95189000000000014.25879999999999994.503054.44589000000000034.020743.37705999999999972.57542000000000031.864361.684052.04802999999999981.90275999999999981.60521.411881.30740000000000011.203231.1451499999999999US19801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520165.44566999999999985.41844000000000045.53242000000000015.17878000000000064.75072000000000034.35259999999999983.90426999999999993.28922000000000032.75851999999999992.66420000000000012.96172999999999983.39338000000000013.664183.83387000000000013.968484.22454000000000024.56215999999999954.89306999999999985.30491000000000055.64043999999999995.98547999999999996.54499000000000036.69251000000000046.24178000000000035.46975000000000034.81667999999999994.20894000000000013.63853999999999993.22691999999999982.62196999999999971.599990.826259999999999990.441110.203989999999999988.9020000000000002E-27.9710000000000003E-2

Services

EU*19801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520160.872159999999999940.902590.984840000000000051.08244000000000011.12122999999999991.147711.19626000000000011.26011000000000011.23649000000000011.14064999999999991.08658000000000011.15704999999999991.30950000000000011.433671.455231.401441.29526000000000011.16408999999999981.07095000000000011.03275999999999990.987619999999999940.924549999999999980.891340000000000020.871049999999999990.821479999999999990.683830000000000050.442749999999999980.169589999999999996.1990000000000003E-20.213770000000000020.365889999999999990.440.479490000000000030.462580000000000050.434960000000000010.41837000000000002OECD*19801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520160.908259999999999960.942710000000000051.079991.10715999999999991.021360.950579999999999980.940300000000000021.090091.24750000000000011.362361.468751.534671.50174999999999991.50378000000000011.565681.68200000000000021.76950999999999991.80592000000000021.83446999999999981.86417000000000011.87754000000000021.8311.72009000000000011.55317000000000021.336191.05241999999999990.788100000000000130.626909999999999970.652849999999999930.811929999999999930.874480000000000040.867869999999999920.833500000000000020.794710000000000030.746850000000000010.69379000000000002US19801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520161.07641999999999991.06085000000000011.125921.01618999999999990.816529999999999980.668279999999999990.627709999999999990.879409999999999911.23449000000000011.56741999999999981.83541000000000021.93049999999999991.774161.67297999999999991.742141.97198999999999992.19886000000000032.36887999999999992.50925000000000022.63599000000000012.75924999999999982.748852.559582.26757000000000011.94604999999999981.60641000000000011.42047000000000011.42182000000000011.523621.481191.184320.882059999999999960.690640000000000030.641120000000000020.612949999999999990.57172999999999996

Manufacturing

EA*19801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520163.36390199999999993.43565299999999983.67912399999999983.87251700000000023.84379600000000023.63874800000000013.40940900000000013.14095399999999982.78057400000000012.50972999999999982.551052.88340800000000023.24061099999999993.51840900000000013.41344400000000013.14002200000000012.98850699999999982.85769800000000012.81808900000000012.78819000000000022.64894000000000012.663712.87272900000000013.07389899999999992.97691099999999992.52529100000000021.6656510.859618299999999950.878390699999999971.85992500000000012.2841222.30513099999999982.49165800000000022.77913999999999992.90472900000000012.8089590000000002US19801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520165.44566600000000015.41843599999999985.53241699999999975.1787824.75072100000000044.3525953.90426999999999993.2892212.75852200000000012.66420099999999982.96173000000000023.39338100000000023.66418199999999983.83387000000000013.96847500000000024.22453699999999984.56215499999999974.89306899999999975.30490900000000035.6404415.98547899999999986.54498900000000026.6925076.24177900000000025.46974800000000014.81667899999999974.20893799999999983.63854500000000013.22691600000000012.62196700000000021.59999099999999990.826255300000000030.441107299999999980.203994199999999998.90156E-27.9705700000000004E-2

Market Services

EA*19801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520160.866511600000000050.900035699999999990.982334200000000051.08749699999999991.1465951.1885881.2363671.2727231.21025999999999991.07126000000000010.999882799999999961.0672481.2204041.33092999999999991.3175091.1874220.999962600000000030.78111290.60264540.499833099999999970.429199400000000010.358020899999999980.346588000000000010.40988110.47032150.464478600000000020.355233599999999980.173934100000000018.9338699999999993E-20.21262270.323741900000000030.356134600000000020.361710499999999990.31269120.244976599999999990.20541980000000001US19801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520161.07642299999999991.0608481.125921.01619299999999990.816532299999999990.668279199999999960.627713999999999990.879412199999999981.23448500000000011.56741599999999991.8354151.9305041.77415799999999991.6729761.74214200000000011.9719912.19886200000000012.3688812.50925399999999992.63599199999999992.75924900000000012.74884800000000022.55958100000000012.26756799999999981.94605000000000011.6064111.4204691.4218181.52361900000000011.48119200000000011.18432500000000010.882060700000000030.690637599999999960.641121500000000010.612950600000000010.5717276

6

UPDATE: focus EA / USOLD

Note: Euro Area: unweighted across on 10 EA countries (AUT, BEL, DEU, ESP, EST, FIN, FRA, ITA, NLD, SVN)

Contribution to productivityContribution to slowdownContribution to productivityContribution to slowdown

OtherShift to servicesManufacturingTradeICTFinanceShift to servicesOtherManufacturingTradeICTFinanceOtherShift to servicesManufacturingTradeICTFinanceShift to servicesOtherManufacturingTradeICTFinance

Euro Area1995-20050.42-0.171.310.360.130.19- 0.06- 0.50- 0.72- 0.26- 0.02- 0.14OECD1995-20050.33-0.211.230.400.160.230.01- 0.43- 0.76- 0.21- 0.01- 0.15

2005-2015-0.08-0.230.590.100.110.052005-2015-0.10-0.190.480.180.140.08

United StatesEU

1995-2005-0.17-0.411.530.430.450.430.070.11- 0.80- 0.34- 0.15- 0.281995-20050.34-0.201.350.390.150.20- 0.01- 0.42- 0.80- 0.25- 0.01- 0.13

2005-2015-0.06-0.340.730.090.300.142005-2015-0.08-0.210.550.140.150.07

United States1995-2005-0.17-0.411.530.430.450.430.070.11- 0.80- 0.34- 0.15- 0.28

2005-2015-0.06-0.340.730.090.300.14

Contribution to productivityContribution to slowdownContribution to productivityContribution to slowdown

OtherShift to servicesManufacturingTradeICTFinanceOther>0Other0Other

EU services: missing in action?

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1995-2005 2005-2015 1995-2005 2005-2015

Euro Area United States

%

contribution to slowdown (pp)Finance

ICTTrade

Manufacturing

OtherShift to services

-0.3

-0.1

-0.3

-0.8

0.1

0.1

-0.1-0.0

-0.3

-0.7

-0.5-0.1

Note: Euro Area: unweighted across on 10 EA countries (AUT, BEL, DEU, ESP, EST, FIN, FRA, ITA, NLD, SVN)

Laggards’ weigh down:EA firms losing touch with global and EA frontier

Manufacturing

Services

Labour productivity(2004=100)

Source: OECD based on Orbis

90

100

110

120

130

140

150

160

EA Laggards EA Frontier Global frontier

90

100

110

120

130

140

150

160

Laggards weigh down: zombie firms on the rise

Share of zombie firmsIndex, 2007=100

50

100

150

200

250

300

2007 2008 2009 2010 2011 2012 2013 2014 2015

EA GB US

Note: EA includes Austria, Belgium, Germany, Spain, France, Greece, Ireland, Italy and the Netherlands

Source: OECD Orbis dataset

Laggards weigh down: gains from lifting them up

0

2

4

6

8

10

Bottom 10% firms Bottom 10%-40% firms

Share of VA Productivity gainsPercentage

Gains in aggregate productivity from laggards catching up to median productivity levels

Source: Berlingieri et al. (2019) “Last but not least: laggard firms, technology diffusion and its structural and policy determinants”, forthcoming

Technology A

Complementarities

Technology B

Digital technologies

R&D and patenting

Human capital and ICT-related skills

Reallocation-enhancing regulations

Organisationalcapital and management skills

Going digital: the missed complementarities

Between technologies

Between technologies and intangibles

Going digital: not yet so common after all

Digital technology diffusion across EU countries, 2017% Share of firms adopting selected technologies

Source: Andrews, D., G. Nicoletti and C. Timiliotis (2018)

0

10

20

30

40

50

60

70

80

High-speed broadband(>30Mbits)

Enterprise Resource Planning Customer RelationsManagement

Cloud Computing

Euro area EU-28 Best perfomer

DNK

NLD NLD

FIN

Going digital: benefits are not the same for all

Firm-level increase in productivity from a 10 percentage point increase in digital adoption

Source: Gal, Nicoletti, Renault, Sorbe and Timiliotis (2019)

More productive firms benefit more from a digitalized environment

0

0.5

1

1.5

2

2.5

Laggard Median Frontier

%

Going digital: skills are key

Productivity shortfall from digital adoption in low productive firms relative to most productive firms (average OECD country)

Skill shortages reduce gains from digital technologies in low productive firms

Source: Gal, Nicoletti, Renault, Sorbe and Timiliotis (2019)

12

The EA sick man: Italy

The EA sick man: a concentrate of problems

0

5

10

15

20

25

ITA ESP BEL PRT LUX DEU AUT FIN FRA SVN

%

-0.3-0.2-0.1

00.10.20.30.40.5

Global frontierItalian frontierItalian laggards

Productivity gaps in services Share of capital in zombie firms, 2013

05

1015202530354045

SWE

NLD

NOR

DNK

GBR

CAN

USA

BEL

FIN

DEU

AUS

OECD AU

TKO

RFR

ACZ

EES

TJP

N IRL

ESP

SVK

ITA

POL

%

Percentage share of adults (15-65) with insufficient or no ICT experience, 2015

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3.0

3.1

05

1015202530354045

Percentage of jobs with high HPWP (left) Mean HPWP index (right)

Diffusion of modern managerial practices (HPWP), 2015

• Complete services Single Market:– especially professions and digital that have gone in

reverse• Increase dynamism and facilitate catch-up:

– barriers to entry (administrative burdens on startups) and exit (insolvency regimes, NPLs)

– ensure conditions for innovation and digitalisation (infrastructure, skills/training, non-bank finance, public and private R&D)

• Repair Italy!

The policy moral

For more, visit the Global Forum on Productivity site

Andrews, D., G. Nicoletti & C. Timiliotis (2018) Digital technology diffusion: a matter of capabilities, incentives or both?

Sorbe, S., P. Gal, G. Nicoletti & C. Timiliotis (2019) Digital Dividend: Policies to Harness the Productivity Potential of Digital Technologies

Gal, P., G. Nicoletti, T. Renault, S. Sorbe & C. Timiliotis (2019) Digitalisation and productivity: In search of the holy grail – Firm-level empirical evidence from EU countries

Adalet McGowan, M., D. Andrews & V. Millot (2017), The Walking Dead?: Zombie Firms and Productivity Performance in OECD Countries

Berlingieri, G., S. Calligaris, C. Criscuolo & R. Verlhac (forthcoming), Last but not least: laggard firms, technology diffusion and its structural and policy determinants

Sorbe, S., P. Gal and V. Millot (2018) Can productivity still grow in service-based economies?: Literature overview and preliminary evidence from OECD countries

References

https://www.oecd.org/global-forum-productivity/https://www.oecd-ilibrary.org/economics/digital-technology-diffusion_7c542c16-enhttps://doi.org/10.1787/273176bc-enhttps://doi.org/10.1787/5080f4b6-enhttp://dx.doi.org/10.1787/180d80ad-enhttps://www.oecd-ilibrary.org/economics/can-productivity-still-grow-in-service-based-economies_4458ec7b-en

BACK UP SLIDES

United States

The Euro Area slowdown is deeper and more productivity driven than in the US

-0.50.00.51.01.52.02.53.0

199019921994199619982000200220042006200820102012201420162018

Potential per capita growthCapital per workerTFPPotential employment rateWorking age popula

22 March, 2019

Decomposition of potential output per capita growth (%pa)OECD Euro area

Source: OECD Economic Outlook (EO_LIVE)

-0.50.00.51.01.52.02.53.0

199019921994199619982000200220042006200820102012201420162018

Potential per capita growthCapital per workerTFPPotential employment rateWorking age popula

0

0.5

1

1.5

2

2.5

United States Euro Area United States Euro Area United States Euro Area United States Euro Area

2001-2008 2009-2016 2011-2016 2011-2017

per hour worked per employee

The post-crisis pick up in productivity has been stronger in the EA than in the US, especially per hour worked

0.105

0.11

0.115

0.12

0.125

0.13

0.135

2014 2015 2016 2017 2018

Evolution of digital services trade restrictions

Euro area United States*Source: OECD STRI

Restrictions in digital trade have gone up

2.2%

0.5% 0.5%

1.0%

2.3%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1995-2005 2005-2015 Scenario A"current trends"

Scenario B"manuf.

rebound"

Scenario C"manuf. &

servicesrebound"

Within servicesWithin manufacturingShiftTotal prod. growth

2015-2025(illustrativescenarios)

Services are key to support EA productivity in the future

EA productivity scenarios under different assumptions regarding future productivity in manufacturing and services

Scenario A: productivity growth as in the pastScenario B: rebound in manufacturing productivity only (to 4%)Scenario C: rebound in manufacturing and services (to 2%)

Zombie firms in the EA and Great Britain

Source: OECD Orbis database

Good management and technical skills are key

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2

Technical Skills

Computer and Electronics

Management of Personnel Resources

Resource Management Skills

High skill shortage Medium skill shortage Low skill shortage

Source: Gal et al. (2019)

Increase in productivity growth associated with a ten percentage point increase in the diffusion of high-speed broadband, for specific skill shortages

Complementarity between digital technologies and skills

23

Policies can have strong effects on productivity via digital adoption

Source: Sorbe et al. (2019)

Effect on firm productivity (through digital adoption) of closing half of the gap with best performing countries in a range of areas.

Average OECD country, effect after 3 years

The EA sick man: allocative efficiency weakens


Source: Adalet McGowan et al. (2017)

5

6

7

8

9

10

11

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Spain Italy

The EA sick man: digital diffusion lags behind

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Individuals using the Internet in the last three months

OECD average Italy

The EA sick man: banks are also sick

-10

0

10

20

30

40

50

60

70

80

90

LVA

GBR

EST

LUX ISL

HUN

SVN

NOR

POL

SWE

SVK

FIN

AUT

CZE

DEU

DNK

FRA

BEL

OECD ES

P

LTU

NLD IRL

EA²

PRT

ITA

GRC

Non-performing loans net of provisionsAs a percentage of capital, Q4 2017

productivity in the Euro area: a (sad) story in four actsSlide Number 2EU services: missing in action?EU services: missing in action?Laggards’ weigh down:�EA firms losing touch with global and EA frontierLaggards weigh down: zombie firms on the riseLaggards weigh down: gains from lifting them upGoing digital: the missed complementaritiesGoing digital: not yet so common after allGoing digital: benefits are not the same for allGoing digital: skills are keySlide Number 12Slide Number 13Slide Number 14Slide Number 15Back up slidesSlide Number 17Slide Number 18Slide Number 19Slide Number 20Slide Number 21Good management and technical skills are keyPolicies can have strong effects on productivity via digital adoptionThe EA sick man: allocative efficiency weakensThe EA sick man: digital diffusion lags behindThe EA sick man: banks are also sick

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