World Productivity: 1996 – 2014; John Fernald (INSEAD/FRBSF )

Abstract

We account for the sources of world productivity growth, using data for more than 36 industries and 40 economies and accounting for changes in the allocation of resources. Over time, productivity growth in advanced economies slowed but emerging markets grew more quickly, which kept global productivity growth relatively constant until 2010. World productivity growth is highly volatile from year to year, which primarily reflects shifts in the reallocation of labor. Deviations from PPP account for about a third of the shifts. Though mark-ups are large and rise over time, their inclusion only modestly affects measured industry-level productivity growth. Instead, they affect the imputed importance of capital reallocation for world GDP growth.

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