Are pro-productivity policies fit for purpose?

Abstract

In this paper we examine productivity trends, drivers of productivity growth and pro-productivity policies across the G-20 economies since 1970. While we find distinctly different productivity growth dynamics between G-20 economies and over time, one common observation is a widely shared slowdown in labour productivity growth since the 2010s underpinned by lower (or even negative) total factor productivity growth. Moreover, the growth in capital per worker hour has also begun to level off. We develop a typology of pro-productivity policies and argue that policies for investment and technological change need strengthening to support a revival of productivity growth. Such policies should include a balanced approach to stronger technological progress and more rapid diffusion; a strengthening of investment, especially in intangibles and public services; and greater attention for human capital. We also argue for stronger institutions and capabilities that allow for dynamic learning about pro-productivity policies across countries and over time.