Mind the gap! International comparisons of productivity in services and goods production

Abstract

In this paper, we make a comparison of industry output, inputs and productivity growth and levels between seven advanced economies (Australia, Canada, France, Germany, Netherlands, UK and U.S.). Our industry-level growth accounts go up to 2003, and make use of input data on labour quantity (hours) and quality (schooling levels), and distinguish between six different types of capital assets (including three ICT assets). The comparison of levels relies on multilateral, industry-specific purchasing power parities (PPPs) for output and inputs, within a consistent input-output framework for the year 1997. Our results show that differences in productivity growth and levels can mainly be traced to market services, not to goods-producing industries. Some of the strong productivity growth in market services in Anglo-Saxon countries may be related to relatively low productivity levels compared to the U.S. In contrast, services productivity levels in continental European countries were on par with the U.S. in 1997, but growth in Europe was much weaker since then. In terms of factor input use, the U.S. is very different from all other countries, mostly because of its more intensive use of ICT capital.