The document discusses the importance of productivity, noting that while it isn't everything, in the long run it is almost everything. It then provides 3 key points about productivity: 1) It is about working smarter, not harder by better combining inputs through new ideas, technologies, and business models. 2) Productivity growth is crucial for potential growth and increasing living standards. 3) Differences in income per capita across countries reflect labor productivity gaps. It then discusses factors that have slowed productivity growth such as sluggish investment since the financial crisis and how multi-factor productivity will be the main driver of future growth.

1. PRODUCTIVITY:
WHY IT MATTERS
Global Dialogue on The Future of
Productivity | Mexico City – 6 July 2015
Catherine L. Mann
OECD Chief Economist and G20 Deputy
… productivity isn't everything, but in the long run it
is almost everything.
Paul Krugman, 1994

2. Productivity is about:
 Working smarter, not working harder
 More output by better combining inputs, via:
new ideas
technological innovations
new business models
more efficient resource allocation.
Productivity crucial for potential growth
Productivity: Why it Matters
2

3. Potential Growth:
Increase living standards, make good on promises,
repay debt
Source: June 2015 OECD Economic Outlook database.
Contributions to average annual percentage change of potential GDP per capita

4. Income per Capita:
differences reflect labour productivity gaps
Percentage differences compared with the upper half of OECD countries, 2013
4

5. Labour Productivity:
growth slowed, even before the crisis…why?
Labour productivity growth since 1990
GDP per hour worked (China and India refer to GDP per worker)
5

6. The legacy of the crisis:
sluggish investment
Business investment in different cycles
Cyclical peak in OECD real business fixed investment=100
(date of peak indicated)
6
80
90
100
110
120
130
140
150
80
90
100
110
120
130
140
150
t 2 4 6 8 10 12 14 16 18 20 22 24 26 28
t=1973Q4 t=1981Q4
t=2000Q3 t=2008Q1
Quarters since the peak

7. Going Forward:
MFP the main driver of future growth
Contribution to growth in GDP per capita, 2000-2060 (annual average)
7

8. A rich tradition of policy-relevant productivity research
based on fruitful interaction with both academia and the
policy-making community.
Recent OECD studies have focused on:
1. Within-firm factors: knowledge-based capital
2. Between-firm factors: resource misallocation
– Prof. Hsieh seminal contribution.
3. Institutional arrangements
– Prof. Banks tomorrow will address
The OECD and Productivity Research
8

9. Two key sources of MFP growth:
1. Reviving the diffusion machine
2. More efficient resource allocation, especially skills
Each of these sources of growth:
1. Depend crucially on public policies…
2. … and can be good for both growth and equity.
An OECD Productivity Network
opportunity to further our understanding,
compare country experiences
9
The Future of Productivity:
presenting today’s OECD research