EXPLAINING PRODUCTIVITY GROWTH IN EUROPE, AMERICA AND ASIA

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EXPLAINING PRODUCTIVITY GROWTH IN EUROPE, AMERICA
AND ASIA a joint research programme by Centre
for Economic Performance (LSE) andZEW
(Mannheim) Dr Tobias Kretschmer (LSE and CEP)
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Productivity Growth in EU and US
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Productivity Growth in EU and US
US productivity miracle drawing away from EU
productivity growth in 1990s. Did (and does)
productivity growth come at a cost, e.g.
environmental, or at the cost of employees
well-being?
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Productivity Growth in EU and US
US productivity miracle drawing away from EU
productivity growth in 1990s. Did (and does)
productivity growth come at a cost, e.g.
environmental, or at the cost of employees
well-being?

• What accounts for Europes slower productivity
  growth compared relative to the USA and what can
  be done to improve it?
• 2. What policies can help foster environmentally
  friendly productivity growth?

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The Programme
Productivity Growth
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(Potential) Reasons for Europes slow
productivity growth

• Management quality (Bloom and Van Reenen, 2006)
• Information and Communication Technologies
  (Stiroh, 2002, Oliner and Sichel, 2002, Bresnahan
  et al., 2002)
• Innovation (Sapir, 2003, Acemoglu et al., 2004)
• Globalisation (Helpman, 1984, 1985)

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Side Effects of Productivity Growth

• Energy use and pollutant emissions (IEA, OECD)
• Different impact on demographic groups
  (Bertschek, 2004)
• Employee Work-Life Balance (Bloom, Kretschmer,
  and Van Reenen, 2006)

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Management

• Will collect data on mgt practices and org.
  structure across a number of countries in EU, US,
  Asia
• Established semi-structured interview technique
• Main questions
• How do management and organisational practices
  vary across Europe, US and Asia?
• How much do these practices matter for
  productivity and growth?
• How does mgt affect innovation, ICT use and
  responses to globalisation?
• What determines the spread of these practices
  across firms in particular, what role does
  policy play?

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Information and Communication Technologies

• ICT use often used to explain US productivity
  advantage
• Attributed to organisational and regulatory
  factors
• Collect detailed firm-level data on ICT use
  (hardware, software, IT specialists etc.) and
  firm performance over time and countries
• Main questions
• Why are US firms so much better at deploying ICT
  both domestically and through their European
  subsidiaries?
• To what extent do managerial and organisational
  practices contribute to this?
• What is the role of an ageing workforce for
  firms' adoption of ICT and for firm performance?

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Innovation

• Claim that EU was good at catching up to US
  frontier but must start pushing out the
  technological frontier itself now
• New policies needed to foster truly innovative
  RD and innovation
• Using international firm-level data (CIS, EPO) on
  RD input/output
• Main questions
• Can European firms adapt their practices and
  structures to become more innovative?
• How can international technology transfer be
  accelerated?
• Are tax-based or grant-based innovation policies
  more cost effective?

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Globalisation

• Multinationals are critical for productivity
  growth and technology transfer, but understanding
  of outsourcing and offshoring decisions is
  limited
• Assemble firm-level and regional-level data on
  location decisions and host countries
  environment
• Main questions
• What are the specific patterns of vertical
  disintegration and their impact on productivity
  of European and US firms?
• Will capital mobility and financial openness
  foster countries specialization on more
  productive industries and/or entrepreneurship?

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Environmentally Sustainable Growth

• All growth is good hypothesis may not be valid
• Economists view on output may be missing out
  important factors possible environment/productiv
  ity, WLB/productivity tradeoff (no evidence for
  latter in previous work).
• Build dataset via telephone interviews in various
  countries
• Main questions
• What is the environmental performance of
  well-managed firms?
• How hard is the trade-off between a firms
  financial performance and its environmental
  friendliness?
• What are firms incentives to adopt environmental
  innovations as a function of regulatory and
  firm-specific circumstances?

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The Team

• Management Dr. N. Bloom (Stanford/CEP) (J. Van
  Reenen, T. Kretschmer)
• ICT Dr. T. Kretschmer (LSE/CEP) (J. Van
  Reenen, N. Bloom, Irene Bertschek)
• Innovation Dr. E. Müller (ZEW) (G. Licht, B.
  Peters, N. Bloom)
• Globalisation Dr. S. Redding (LSE/CEP) (A.
  Charlton, D. Sturm)
• Environment Dr. R. Martin (CEP) (N. Bloom, A.
  Ziegler)

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The Advisory Board
Tim Bresnahan (Stanford University) Chris Martin
(H.M.Treasury) Frieder Meyer-Krahmer (German
Ministry for Research and Education) Vicky Price,
DTI, Chief Economist. Hermann Remsberger
(Deutsche Bundesbank) Andrei Shleifer (Harvard
University) Reinhilde Veugelers (DG Econ/Fin
Affairs and KUL Leuven). Eckhardt Voscherau (BASF
AG)