The Impact of Information and Communication Technologies in Latin America
Edited by Mario Cimoli, André A. Hofman and Nanno Mulder
Chapter 3: ICT and Productivity Growth in Europe: An Update and Comparison with the US
Mary O’Mahony, Marcel Timmer and Bart Van Ark 1 INTRODUCTION During the second half of the 1990s the comparative growth performance of Europe vis-à-vis the United States has undergone a marked change. For the first time since World War II labour productivity growth in most countries that have been part of the European Union (EU) fell behind the US for a considerable length of time.1 Until the beginning of the 1970s, rapid labour productivity growth in the EU was commensurate with a catching-up in terms of GDP per capita levels on the US. A first break in this pattern occurred in the mid-1970s. While catching-up of labour productivity continued, the gap in GDP per capita levels between the EU and the US has not narrowed any further since the mid-1970s (see Figure 3.1). This reflects the slowdown in the growth of labour input in Europe, which was related to increased unemployment, a decline in the labour force participation rates and a fall in average working hours. The second break, which is the focus of this paper, occurred in the mid-1990s when the catching-up of labour productivity also came to a halt. Whereas average annual labour productivity growth in the US accelerated from 1.3 per cent during the period 1980–95 to 2.3 per cent during 1995–2005, EU growth declined from 2.4 per cent to 1.5 per cent.2 Despite a largely cyclical growth acceleration in EU GDP during 2006 and 2007, productivity growth has not shown any significant improvement....
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