World Economic Performance
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World Economic Performance

Past, Present and Future

Edited by D. S.P. Rao and Bart van Ark

World economic performance over the last 50 years has been spectacular. The postwar period has witnessed impressive growth rates in Western Europe and Japan, and in recent times China and India. This new book discusses these issues and tackles topical questions such as; what are the socio-economic and institutional factors that have contributed to this impressive performance? Will China and India continue to grow at the same rate over the next two decades? What are the prospects for Japan, the US and other advanced economies? The book brings together contributions by eminent scholars including the late Angus Maddison, Professors Justin Lin, Bob Gordon, Ross Garnaut, Bart van Ark and others to provide answers to these fascinating questions. The chapters analyse the economic performance of selected countries including China, India, Japan, Indonesia and the US, as well as Western Europe, Latin America and developing countries as a group. The time period of the study is from 1850 to the present and includes forecasts to 2030.
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Chapter 11: Europe's Productivity Performance in Comparative Perspective: Trends, Causes and Projections


The benefits of the modern knowledge economy differ greatly between advanced economies. The EU–15, that is the 15 European Union countries that constituted the Union up to 2004 that is the focus of this chapter, experienced a slowdown in GDP growth from an annual rate of 3.5 per cent during the period 1973–1995 to 2.3 per cent during the period 1995–2008. At the same time productivity growth (measured as GDP per hour of work) slowed from an annual rate of 2.7 per cent to 1.5 between these two time periods. At the same time, average annual GDP in the United States slightly accelerated from 2.9 to 3.3 per cent and labour productivity sharply increased from 1.3 per cent to 2.1 per cent between 1973–1995 and 1995–2008 respectively. While differences in the timing of business cycles in the United States and the European Union may have some effect on this comparison, they do not explain these divergent trend growth rates. The slower output and labour productivity growth rates in Europe compared to the United States since 1995 reverse a long-term pattern of convergence. This chapter first reviews the growth and productivity performance in Europe since 1950, considering three periods characterized by different drivers of productivity. In the period 1950–1973, European growth was characterized by a traditional catch-up pattern based on the imitation and adaptation of foreign technology, coupled with strong investment and supporting institutions. However, the traditional postwar convergence process came to an end by the mid 1970s (Crafts and Toniolo, 1996; Eichengreen, 2007). Then, in the period from 1973 to 1995, output and productivity growth in both Europe and the United States began to slow.

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