Invertir en el crecimiento de la productividad
Lejos de la Productividad … y su Frontera. El viejo diagnostico
Es hora de aumentar la inversión y aprovechar la próxima ola de productividad.
Hoy el mundo necesita más que nunca el crecimiento de la productividad.
Es la única forma de elevar el nivel de vida en un contexto de
envejecimiento, transición energética, reconfiguración de la cadena de
suministro y balances mundiales inflados.
Invirtiendo para recuperar el crecimiento de la productividad anterior a la crisis financiera mundial, las economías avanzadas podrían ganar entre 1.500 y 8.000 dólares de PIB per cápita en 2030. Estas economías experimentaron su desaceleración cuando dos oleadas de crecimiento de la productividad en el sector manufacturero (impulsadas por la ley de Moore y la deslocalización) llegaron a su fin. La inversión posterior a la CFG se redujo de forma brusca y persistente, sin generar nada que ocupara su lugar. Pero hoy en día, la inversión dirigida en áreas como la digitalización, la automatización y la inteligencia artificial podría impulsar nuevas oleadas de crecimiento de la productividad.
La inversión es también el motor principal para que las economías emergentes alcancen o permanezcan en el "carril rápido".
Las actuales economías del carril rápido (China, India, partes de
Europa Central y Oriental y Asia emergente) han mantenido un alto nivel
de inversión, entre el 20% y el 40% del PIB. La han canalizado hacia la
construcción de ciudades e infraestructuras que apuntalan una
urbanización satisfactoria, una mayor productividad en los sectores de
servicios y una industria manufacturera conectada globalmente. Las
economías de los carriles medio y lento podrían seguir su ejemplo.
Hay motivos para la esperanza y para la acción. El aumento de la inflación y de los tipos de interés puede indicar una demanda más fuerte y fomentar la asignación de capital productivo, desalentando al mismo tiempo el creciente endeudamiento y la inflación de los precios de los activos de las dos últimas décadas. La IA tiene potencial para cambiar el trabajo de forma rápida y generalizada, creando condiciones fértiles para este tipo de inversiones.
El mundo necesita -y puede- acelerar el crecimiento de la productividad
En los últimos 25 años, el nivel de vida de la población mundial ha aumentado considerablemente, impulsado por el fuerte crecimiento de laproductividad1.
Sin embargo, el crecimiento de la productividad se está desvaneciendo y, en muchas partes del mundo, no se ha iniciado en absoluto. Desde la crisis financiera mundial de 2008, se ha producido una ralentización casi generalizada. En las economías avanzadas, el crecimiento de la productividad ya se había desacelerado antes de la CFG -de una media del 2,2% anual en los cinco años anteriores a 2002 al 1,6% hasta 2007- y luego cayó aún más, a menos del 1%, en la década 2012-22.3 En las economías emergentes, el crecimiento de la productividad se aceleró antes de la CFG, del 2,0% en los cinco años anteriores a 2002 al 5,9% hasta 2007, y luego cayó al 3,4% en la década hasta 2022.
El crecimiento de la productividad significa obtener más de nuestro trabajo y de nuestras inversiones (véase el recuadro "Medir la productividad"). Es especialmente necesario ahora que el mundo se enfrenta a los numerosos retos de una nueva era geoeconómica. El crecimiento de la productividad es el mejor antídoto contra la inflación de los precios de los activos de las dos últimas décadas, que ha creado unos 160 billones de dólares en "riqueza de papel" y cantidades aún mayores de nueva deuda. Sin un aumento de la productividad, podríamos estar abocados a un restablecimiento de la riqueza al estilo japonés o a un periodo de inflación sostenida.5 En segundo lugar, tenemos que financiar la transición neta a cero y seguir mejorando los niveles de vida si queremos lograr un crecimiento inclusivo sostenible. Cerrar la brecha de empoderamiento y la brecha de inversión neta cero requiere el equivalente al 8% del PIB mundial anual, lo que será muy difícil de lograr sin un rápido crecimiento de la productividad. 6 Otros desafíos que se avecinan incluyen el envejecimiento de la población en la mayoría de las economías avanzadas, China y otros lugares, junto con las tensiones comerciales mundiales y las interrupciones de la cadena de suministro.
Este informe ofrece a los responsables públicos y
privados una visión general de las características más importantes del
crecimiento de la productividad, por qué se ha ralentizado y qué haría
falta parareactivarlo7. Analiza las economías emergentes que
circulan por diferentes "carriles" a distintas velocidades y destila lo
que las economías rezagadas tendrían que hacer para pasar al carril
rápido del crecimiento.
Defiende un imperativo común a todas las economías: la inversión en capital tangible e intangible.
Este informe consta de cuatro secciones.
La Sección 1 repasa los resultados de la productividad mundial en los últimos 25 años e identifica qué economías emergentes se encuentran en los carriles rápido, medio y lento de la autopista de la convergencia con los niveles de vida de las economías avanzadas.8
La Sección 2 ofrece un análisis en profundidad de la reciente ralentización del crecimiento de la productividad en las economías avanzadas.
La sección 3 profundiza en las economías emergentes y en lo que se necesita para estar en el carril rápido. Por último,
la sección 4 analiza el crecimiento de la productividad en esta nueva era geoeconómica, exponiendo los principales retos y oportunidades para las empresas y los responsables políticos.
1. The rise and fall of global productivity growth in the 21st century
Over the past 25 years, the world experienced strong productivity growth, driven in large part by China and India. This trend enabled many emerging regions and economies to narrow the gap—or “converge”—with the living standards of more advanced economies. However, the global financial crisis (GFC) worsened an existing slowdown in productivity growth in advanced economies and applied the brakes to a pre-crisis surge in emerging economies.
The world has had strong productivity growth over the past 25 years, driven by standout regions
From 1997 to 2022, median economy productivity jumped roughly sixfold, going from approximately $7,000 to $41,000 per employee, which is equivalent to an annual growth rate of 7.3 percent.9 The average global productivity growth rate was 2.3 percent annually during this period. (For an even longer-term perspective, see sidebar “The very long run: 100 years of convergence and divergence.”)
Gains were most prominent in the middle and at the bottom of the global productivity distribution, as several major population centers experienced a surge of catch-up growth (Exhibit 1). The bottom 10 percent of economies made large gains, quadrupling their productivity, while progress was slower for the top 10 percent, which edged forward by 20 percent over this period.10
China and India accounted for nearly half of aggregate global productivity growth (Exhibit 2). Other regions—Central Europe, Eastern Europe, and Emerging Asia—also made rapid progress, narrowing their gap with advanced economies. Yet growth rates in the Middle East and North Africa, Sub-Saharan Africa, and Latin America and the Caribbean were similar to or lower than those in advanced economies, which means that they did not converge at all or even fell behind.
xhibit 2
Emerging economies are on a three-lane highway to catch up with advanced economies
Ideally, all economies would have high productivity growth and raise their living standards. Additionally, economies with lower productivity levels would catch up—that is, converge—with higher-productivity economies as they replicate the best ideas in humanity and generate higher initial returns on fresh capital.
Yet the pace at which emerging economies have been raising productivity varies widely (Exhibit 3). If they kept the average pace of productivity growth of the past quarter century, Poland would fully close the gap with the average advanced economy in 11 years and China would get there in 16 years. But Indonesia would take 135 years, and Argentina would never get there.11
We classify economies into the fast, middle, and slow lanes of convergence. These lanes are defined by both the economies’ starting points (their productivity level in 1997 on the x-axis), and their speed (their rate of productivity growth on the y-axis).12 In short, an economy in the fast lane has experienced high productivity growth relative to its starting productivity level. Our data set includes 27 advanced economies and 91 emerging economies.
Advanced economies are at the forefront. These 27 economies in Western Europe, North America, and Advanced Asia represent about one billion people. As a group, they have averaged 1.0 percent productivity growth over the past 25 years. This is a relatively slow-moving target for economies striving to catch up, but advanced economies are still moving forward and capturing the power of compounding improvements.
China, India, most of Central and Eastern Europe, and some other individual economies are in the fast lane. Thirty emerging economies, representing 3.6 billion people, are in the top third of performance. On average, their productivity growth was about 6 percent per year. This enabled more than one billion people to escape poverty over the past 25 years in China and India alone.13 At their 6 percent rate, an average fast-lane economy with a productivity level of $34,000 would take 28 years to match the advanced-economy average.14 In Europe, fast-lane economies include Romania, Poland, Estonia, Lithuania, and Latvia. Beyond China and India, Asian fast-lane economies include Vietnam, Bangladesh, and Cambodia.15 The fast lane also includes a few top performers from Sub-Saharan Africa, like Ethiopia and Rwanda.
The middle lane has economies from every region, slowly converging with advanced economies. In 30 economies, with 1.3 billion people, productivity growth has been broadly in line with expectations given their starting points. Between 1997 and 2022, they averaged 2.1 percent productivity growth—twice the rate of advanced economies. At this rate, an economy with an average middle-lane productivity of $36,000 per worker in 2022 would take about 130 years to converge with the advanced-economy average. Emerging Asia dominates this lane, which also includes economies from Sub-Saharan Africa (Tanzania, Kenya, and Uganda) as well as some relative outperformers from Latin America and the Caribbean (Peru, Costa Rica, and the Dominican Republic), among others.
Economies in the slow lane, largely from Latin America and the Caribbean, Sub-Saharan Africa, and the Middle East and North Africa, have not converged at all. These 31 economies have 1.4 billion people, almost one-third of whom live in poverty.16 Their productivity has grown at an average rate of 0.3 percent. Several of them not only failed to narrow the gap with advanced economies over the past 25 years but actually fell further behind. At this pace, they would never converge with advanced economies.
To show how economies’ productivity levels evolved over the past quarter century, we need to expand the x-axis. In 1997, most economies’ productivity levels were far from what they are today. For instance, India produced $6,200 per worker, and Poland's productivity stood at $42,200.
By 2022, most economies were in very different positions. Both India and Poland had significantly higher productivity levels: India’s had grown to $21,800 and Poland’s to $97,000.
Fast-lane regions carved out the productivity growth frontier, thanks to strong increases in capital per worker
Taking a regional view over time, China, Eastern Europe, Central Europe, Advanced Asia, and North America each defined the “frontier” of growth possibilities at different stages of development over the past 25 years (Exhibit 4).17 Thanks to internal reforms and global integration, China produced the highest growth rates and took its output from only $6,000 per worker to more than $40,000. Central and Eastern Europe also achieved rapid progress, particularly during the integration period with Western Europe. Central Europe doubled output per worker to more than $80,000. Meanwhile, Latin America and Sub-Saharan Africa stayed well below the productivity frontier throughout the period.
Across all regions, the standout driver has been increasing capital per hour; in most places, it accounted for 70 to 80 percent of overall productivity growth.18 China and India led the way, with growth in capital per hour contributing 6.5 and 3.9 percent to productivity growth, respectively (Exhibit 5). They started in 1997 with capital stock of just $10,000 to $11,000 per person, about 5 percent of the level in advanced economies.19 Both economies then invested heavily in urbanization, infrastructure, businesses, and manufacturing facilities. They multiplied their capital stock per worker by factors of eight and four, respectively, and contributed about 45 percent of global capital formation. Central Europe and Emerging Asia were the closest followers, roughly doubling their capital stocks.
Switching lanes is possible
Although the successes of China and India over the past quarter century may seem miraculous, they are not unique. China and India were once slow growers, and they have recently been following the paths previously taken by economies such as Japan and South Korea (Exhibit 6).
Similarly, an economy in the middle or slow lane can take steps to enter the slipstreams of faster productivity growth, lifting standards of living in the process. From 2014 to 2019, for example, the Philippines grew its productivity at an annual rate of 4.5 percent, Thailand at 3.7 percent, and Malaysia at 3.0 percent. In Africa, Tanzania (4.7 percent), Cameroon (4.2 percent), and Kenya (4.0 percent) each achieved fast-lane rates over the same period.
Productivity growth and the pace of convergence have slowed since the GFC
In recent years, progress in emerging economies has slowed across all three lanes (Exhibit 7). This means the pace of convergence with advanced economies has been decelerating, as shown in Exhibit 4 by the almost universal inverted U-shape in each region’s trajectory. The growth rates of emerging economies have been falling toward those of advanced economies, despite their significantly lower productivity levels. The pandemic accelerated this negative trend from 2020 to 2022, though productivity numbers during crises should be interpreted with care.20
Productivity growth in advanced economies had already slowed before the GFC, falling from an average of 2.2 percent per year between 1997 and 2002 to 1.6 percent between 2002 and 2007. Since then, it has declined to less than 1 percent. Across North America, Western Europe, and Advanced Asia, the persistence of the slowdown, more than a decade after the GFC, is striking. The United States was one of the few advanced economies that managed to rebound slightly in the final years preceding the COVID-19 pandemic. Yet even there, productivity growth rates for 2018 and 2019 (0.9 percent and 1.6 percent, respectively) would not be enough to conclude that the economy was on a new acceleration path.
For emerging economies, all three lanes experienced an acceleration in the run-up to the GFC, but the surge did not last. Almost all fast-lane economies suffered sharp declines after the GFC, though the lane as a whole stayed above its 1997–2002 pace thanks to China and India’s large and growing weight.21 The slow lane (largely populated by economies in Sub-Saharan Africa, Latin America and the Caribbean, and the Middle East and North Africa, with some notable exceptions) experienced sluggish growth of 2.1 percent before the GFC, then turned negative for the entire 2012–22 period.
If capital per worker explained most of high productivity growth for 25 years, did it also drive the slowdown? In advanced and fast-lane economies, slower growth in capital per worker after the GFC does indeed explain a lot. By contrast, middle-lane economies had higher capital deepening after the GFC than they did before it (in part because the Asian financial crisis of 1997 choked off investment). In the slow lane, growth in capital per worker was low all along, explaining persistently slow productivity growth. Beyond capital, other factors that had accelerated before the GFC weakened after it. These include slower growth in international trade and the integration of global supply chains, which hindered advances in the economic complexity of exports, slower progress of institutional reforms, and less favorable demographic trends.22
2. Advanced economies: The breaking waves of productivity
In this section, we unpack the causes of declining productivity growth in advanced economies. We look in particular at various factors and sectors for the United States, Japan, and the five largest economies of Western Europe, which together represent 78 percent of GDP in all advanced economies.23
While many drivers affect productivity growth, two stand out for explaining the performance of advanced economies in recent years. First, manufacturing experienced waves of productivity advances fueled by the effects of Moore’s law and a burst of offshoring and restructuring. (Moore’s law, which holds that the number of transistors in a microchip doubles every two years, signals more broadly that computers become more powerful and efficient while coming down in cost.) These waves yielded productivity gains before the GFC but petered out over time. The second major factor is a secular decline in investment across multiple sectors (Exhibit 8). These two trends explain the slump in advanced economies almost entirely.24 Digitization was much discussed as the main candidate to rev up productivity again, but its impact failed to spread beyond the information and communications technology (ICT) sector.
The implications of the slowdown are significant. If the United States had not had a manufacturing slowdown, its GDP per capita in 2022 would have been around $5,000 higher. If growth in capital per worker had not declined, it would have been around $4,500 higher.25 Overall, if the United States had continued growing its productivity at pre-GFC rates, its GDP per capita would have been $8,900 higher in 2022. In Germany, France, and the United Kingdom, per capita income could have been $3,500 to $5,900 higher; in Japan, it could have been about $1,700 higher. Yet economies could reverse these trends in the years ahead. If they invest to regain pre-GFC productivity growth, advanced economies stand to gain between $1,500 (Japan) and $8,000 (United States) in incremental GDP per capita by 2030.
Two waves of productivity growth in manufacturing have ended
Two cresting waves explain much of the rapid productivity growth in manufacturing until the mid-2000s as well as the subsequent slowdown. First, Moore’s law (the doubling of the number of transistors in a microchip every two years) translated into price declines and rapid consumer gains. But this effect waned over time, slowing total factor productivity (TFP) growth in electronics manufacturing (Exhibit 8, 1A).26 Second, before the GFC, the automation, restructuring, and offshoring of labor-intensive production boosted capital per worker in manufacturing, while advanced economies retained primarily capital-intensive (and knowledge-intensive) activities. But that effect petered out, too (Exhibit 8, 1C). There was also a slowdown in TFP growth in manufacturing subsectors other than electronics, with multiple causes depending on the subsector, though none standing out (Exhibit 8, 1B).27
These waves caused strong pre-GFC growth in both electronics and other manufacturing, which significantly contributed to aggregate productivity growth (Exhibit 9, US example).28 As their contribution waned after the GFC, so too did productivity growth in the overall economy (see sidebar “A detailed economy-sector view of the productivity slowdown and the mix effect” for a comprehensive economy-by-economy and sector-by-sector analysis).
The declining value of Moore’s law
While most manufacturing subsectors suffered a productivity slowdown, electronics was the main culprit. The main reason was slowing growth in consumer value derived from the effects of Moore’s law (Exhibit 8, 1A). While nominal value added growth was relatively stable, product performance per unit of price surged in the late 1990s and early 2000s, and subsequently fell. Hence, despite the ongoing progress of Moore’s law, the translation into real value added slowed.29 Technically, this shows up as lower growth in the value-added deflator (Exhibit 10, US example).30 This was true in the United States, Japan, the United Kingdom, Germany, and France (but particularly stark in the United States and Japan because they benefited from a larger positive pre-GFC wave).
In the United States, productivity growth in electronics manufacturing fell from 24.0 to 5.4 percent, explaining about 40 percent of the slowdown in all of manufacturing and 20 percent of the economy-wide decline. This was despite the fact that this sector represents about 1 to 2 percent of employment and value added; this small part of the economy had an outsize effect. The other manufacturing subsectors dropped from 3.7 to 0.6 percent. In our Western European sample, on average, growth in electronics productivity declined from 8.9 to 2.4 percent, explaining a fifth of the manufacturing slowdown (with the United Kingdom and Germany experiencing larger declines off a higher base); other subsectors declined from 3.0 to 1.3 percent. In Japan, electronics declined from 12.6 to 3.7 percent; the other subsectors went from 1.8 to 1.4 percent.
The end of an offshoring and restructuring wave
Productivity growth in manufacturing also slowed after the GFC with the breaking of the offshoring and restructuring wave (Exhibit 8, 1C).31 In the late 1990s and early 2000s, labor-intensive manufacturing jobs in many advanced economies were either moved to places where labor was cheaper (often to China but also to Mexico, Central Europe, or Eastern Europe) or automated.32
In the United States, these choices led to a decline in manufacturing hours worked of 2.4 percent per year between 1997 and 2007 (Exhibit 11). Capital investment did not suffer an equivalent decline, resulting in a boost in capital per worker and hence productivity growth, presumably because the parts of manufacturing that remained required ongoing investment to stay on the frontier. Once the offshoring and restructuring wave ended, the hours worked in manufacturing resumed growth, and growth in productivity and capital per worker slowed to more moderate levels. A similar pattern emerged in Europe and Japan. In Germany, a 0.6 percent decline in hours worked reversed to 0.5 percent growth, and in the United Kingdom, a 3.7 percent decline became 0.3 percent growth. In France the decline continued but slowed, going from a 1.5 percent reduction to 0.4 percent, and in Japan from 2.0 percent to 0.6 percent. Of these economies, only Germany saw equivalent growth in capital services.
A secular investment decline also weakened productivity growth
A marked and persistent decline in the growth of capital per worker explains the other half of the post-GFC productivity slowdown in the United States, Germany, the United Kingdom, and Japan.33
The slump in capital investment slowed productivity growth beyond manufacturing by 0.5 percentage point in the United States, 0.3 point in our Western European sample economies, and 0.2 point in Japan, accounting for about 30 to 50 percent of their overall slowdown (Exhibit 8, 2). This decline spanned almost all sectors: in the United States, the only exceptions were mining and agriculture; in Europe, only mining, construction, and finance and insurance generally remained stable, while real estate accelerated.
More specifically, slowing growth in tangible capital (for example, machines, equipment, and buildings) explains almost 90 percent of the drop in the United States and 100 percent in Europe. From 1997 to 2019, gross fixed capital formation in tangibles fell from 22 to 14 percent of gross value added in the United States and from 25 to 17 percent in Europe. Intangible capital growth (for example, R&D and software) was more resilient but could not make up for falling investment in the material world. Gross fixed capital formation in intangibles increased from 12 to 16 percent in the United States and from 10 to 12 percent in Europe.34 Investment in intangibles is needed to boost corporate performance and labor productivity, but it may face barriers (skills needed to scale up, limited collateralization and recovery value), and the productivity benefits can take longer to materialize.35
To complete the investment picture, we looked beyond the growth of capital per worker to net fixed investment as a percentage of GDP (Exhibit 12). Two dips occurred in most economies. The first and smaller one coincided with the end of the dot-com boom: as the bubble burst in the early 2000s, investment slowed, particularly in the United States and Europe. The larger slump occurred when the GFC hit; to date, none of the advanced economies we analyzed has seen its investment rate recover to pre-crisis levels.
Sluggish demand and macroeconomic uncertainty are likely the main culprits behind the decline in investment
Given the timing of the slumps, investment most likely fell as a result of each crisis. In their wake, the macroeconomic outlook was uncertain and demand was weak, resulting in lower productivity growth. Then, even when economic activity resumed and conditions improved, the temporary shock appeared to cause longer-term scars (or so-called hysteresis effects).36
Over the longer term, other macro trends such as a structural savings glut from aging, inequality, and capital inflows from emerging economies may have added to the problem, driving advanced economies into “secular stagnation” (a phenomenon marked by sluggish demand, persistent output gaps, low interest rates, and low investment).37
These longer-term effects and the timing of the slowdown suggest that sluggish demand played a strong role in slowing productivity growth, which contrasts with the typical supply-side-centered explanation. The virtuous cycle of growth can begin with (or be constrained by) any of its parts, including the demand side. Labor productivity growth drives higher incomes, which increase demand for products and services, which in turn encourages business investment and innovation, driving productivity growth and restarting the cycle.
On the plus side, US shale oil and gas attracted a major investment boom, with yearly capital expenditure increasing by a factor of seven between 2007 and 2014. Investment into the sector later fluctuated, but in 2023 it was still about five times higher than in 2007. Consequently, the United States added more output to oil and gas than any other economy in the world. However, this was not enough to offset the overall investment decline.
Regulation may have contributed to lower investment
Changing dynamics in regulation and competition policy may also play a role in holding back investment. A surge of reform swept advanced economies from the early 1980s to about the time of the GFC, with nothing comparable in the past decade.38 Business surveys have singled out regulation as one of the central impediments to investment.39 Other regulatory aspects, such as credit tightening in the post-crisis years (at least partially due to more stringent banking regulation), may also have contributed to lower investment and productivity growth.40
However, regulation is a complex topic encompassing many aspects that can enhance or hinder investment. Even the issues cited above have had mixed or unclear effects. Some evidence suggests that the relationship between credit access and productivity growth may be U-shaped—that is, productivity growth is lower with both high and low levels of credit access, and higher at a sweet spot in the middle.41 And some studies find no relationship between increasing regulatory stringency and the lower business dynamism observed in the United States.42
The decline in investment was steep and sudden, occurred in both the early 2000s and 2008 (coinciding with recessions), and affected most sectors—all of which suggests that regulatory changes were probably not the main reason behind it. But some regulatory choices, including the absence of a strong new surge of pro-competition reform in the past decade, may have contributed to the investment slowdown, or at least limited its recovery in some economies.
Digitization didn’t make a broad splash beyond the ICT sector
The periodic introduction of new technologies has fueled productivity growth over the past century. If Moore’s law effects and offshoring added momentum at the turn of the century, it may have been unrealistic to expect their energies to continue. A burst of digital innovation might have compensated, but so far it has had a muted impact on productivity beyond the ICT sector.
The tech sector at the heart of the digital transition has indeed delivered productivity growth—in fact, the fastest growth among all sectors in the United States both before and after the GFC (6.7 percent per year before the crisis and 5.0 percent afterward; see Exhibit 9). ICT similarly had the fastest productivity growth in Western Europe. Although it slowed from 5.1 percent in 1997–2007 to 2.7 percent afterward, this was still about four times higher than overall productivity growth. In Japan, ICT productivity growth went from 1.9 to 0.5 percent. (See sidebar “A detailed economy-sector view of the productivity slowdown and the mix effect.”)
However, digitization has not made the same impact on productivity in other sectors—at least not yet. Three reasons might account for this: the time required for technology adoption and creative destruction, the less transformational nature of current innovation, and mismeasurement.
The first and most convincing argument is that digital and technological adoption is a long-run phenomenon. There are multiple historical precedents for a lag between the invention of a technology and its impact on productivity, from electricity in the early 20th century to computers and IT systems toward the end of it.43 In fact, the early years of a new technology may generate a drag on productivity growth before it can be usefully adapted, with productivity following a J-shaped trajectory.44 Digitization has also led to duplication of online and offline channels, giving customers more choice but delivering productivity benefits only when the offline channels are rationalized or discontinued. Finally, diffusing digital technologies across small businesses can be slow and difficult.45
A second proposed reason is that digital and other innovations of the past decade may be simply less transformational than past innovations.46 But looking ahead, there is reason for optimism about the effects manifesting. Previous MGI research has estimated that digitization and other technological advances could add 0.5 to 1.0 percent to annual productivity growth, which is substantial.47 In healthcare, for example, telemedicine could account for up to 1.5 percentage points per year through better care quality, less time lost in waiting rooms, and better back-end processes. Other research, including from MGI, has argued that more recent advances such as AI could have an even larger impact on productivity growth.48
Last, it may be that current measures of productivity do not capture the increases in value added that these technologies promote. Many new benefits are incorporated into products or services free of charge, for example, which means productivity statistics do not capture them. The best available evidence suggests that mismeasurement might explain up to 10 percent of the overall slowdown in productivity growth, a relevant but comparatively small effect.49
3. Emerging economies: The fast lane to prosperity
Over the past 25 years, emerging economies in the fast lane of productivity growth have caught up with advanced economies, with China and India at the forefront.
In this section, we map our three lanes against five factors commonly called out in development economics literature and find a strong match—as well as interesting nuance:
1. Radically high capital investment, at 20 to 40 percent of GDP, is the standout driver of rapid productivity growth, in most cases underpinning at least 70 to 80 percent of it.
This investment is deployed into:
2. Building cities in the right way and mechanizing agriculture, moving workers off the farm and into urban construction and service sectors;
3. Achieving distinctive productivity growth within these expanding service sectors, where capital deepening is instrumental to creating formal productive jobs; and
4. Making manufacturing more sophisticated and global, driving its output and value added beyond commodities (although often not adding employment).
All of this is enabled by:
5. Solid institutions, innovation, and education, all of which support investment but also require it.
Fast-lane economies are generally high performers across these five factors (Exhibit 13). Middle-lane economies have either not put some of the building blocks in place or have done so less successfully, while slow-lane economies have faced structural challenges such as weak institutions and high commodity dependence. Interestingly, workforce shifts from agriculture into services turn out to be of lesser importance in distinguishing the lanes. What matters is building cities and their service sectors in the right way, with significant capital investment and formal jobs.
To understand how fast-lane economies have outpaced other emerging economies, we have used sector data for 54 economies that represent 87 percent of emerging economies’ GDP.50 To illustrate our findings, we have selected 18 example economies (six each from the fast, middle, and slow lanes); they represent all regions and 72 percent of emerging economies’ GDP.51 For analyses of additional factors such as urbanization, commodity dependence, and education, we cover all the economies represented in previous chapters.52
Fast-lane economies invest more than the rest
Growth in capital per worker accounted for about four-fifths of productivity growth in most emerging regions over the past 25 years and for much of the difference in productivity growth between lanes, as seen in section 1. Most fast-lane economies managed to sustain investment at 20 to 40 percent of their GDP over the whole period.
Residential and commercial property are essential for the urbanization that raises growth and productivity in a modern economy. Infrastructure investments make transportation and utilities more productive and produce spillovers across the economy. Machinery and equipment, from traditional types to new sophisticated robots, complement all sorts of workers’ tasks. Investment in R&D and other intangibles enables manufacturing to diversify and become more complex and productive, and it raises productivity in all types of services, from hospitals to digital and IT systems.
This is not to say that higher investment is always good, or that what economies invest in does not matter. As economies develop and returns on investment decline, rebalancing to lower investment and higher consumption is natural. Investment can stay too high for too long, ignoring low returns, which can be particularly destabilizing if it is funded by debt instead of savings. But on the whole, higher investment has been associated empirically with higher output and productivity growth, lower inflation, better fiscal and external balances, and lower poverty rates and inequality.53
China, Ethiopia, India, Poland, Türkiye, and Vietnam make up our sample set of fast-lane economies, and their high rates of investment multiplied their ratio of capital stock per worker (Exhibit 14).
In these fast-lane economies, policies set strong and stable incentives for private investment. They included opening markets to some level of competition and foreign investment, setting up efficient financial sectors, and establishing legal systems to protect ownership rights. Central and Eastern European economies that were integrated into the EU drew in foreign investment and consolidated their financial sectors. From 2004 to 2008, one-fifth of the $220 billion (€168 billion) of net foreign direct investment inflows to Central and Eastern Europe went into the financial sector.54 Much of the rest went to modernize outdated factories and production methods. For example, vehicle production more than doubled between 2000 and 2011, while employment in the sector rose only 60 percent, resulting in a significant productivity increase.
Large companies drive investment and growth, making it important to help firms scale up.55 Larger entities have more capacity to invest and export, to adopt technology, to develop talent, to pay their workers better wages, and to adapt to shocks. Many emerging economies have large shares of small, informal businesses that find it hard to boost productivity, affecting development.56
Fast-lane economies also had the willingness and capacity to plow public money into critical infrastructure such as road and railway networks, power and telecommunication systems, health and education facilities, and other urban infrastructure. Ethiopia’s impressive pace relied in large part on public investment, while China’s capital stocks were 86 percent public by 1997 after nearly two decades of high state investment.57 When this type of investment is very high, however, it eventually starts yielding lower returns. In China, for instance, public capital stock is already at OECD levels, but private capital per worker is still well below that point, despite remarkable increases.58 This suggests there is scope for faster growth of private capital.
Slow- and middle-lane economies did not enjoy this pace of public or private investment growth. Even lower-income economies such as Cameroon and Pakistan that had very low capital stock per worker in 1997, comparable to China and India, achieved very little growth. Without enough savings and the policy settings to attract private and foreign investment, and without the capacity for public investment, they did not build the infrastructure, plant, machinery, and human capital needed to improve productivity growth. For example, 18 percent of Africa’s urban population still lacks access to electricity, and 66 percent has no access to piped water and sewerage systems.59
Urbanization shifts workers away from farms and into services and construction
Enabled by investment in infrastructure, urbanization has meant a major shift in the composition of economies, away from agriculture and into the construction and service-sector jobs that concentrate in cities (Exhibit 15). The urban share of the population in emerging economies has increased on average by nearly ten percentage points over the past quarter century, with remarkable cases across regions (China’s share grew by 31 percentage points, Costa Rica’s by 26 points, Albania’s by 24 points, and Botswana’s by 22 points). Urbanization itself is a weaker differentiator of fast-lane economies than the other factors discussed in this section; many middle- and slow-lane economies also urbanized rapidly. How urbanization is harnessed is what makes the difference.60 Fast-lane economies were better able to develop their cities’ infrastructure and buildings as their workforce was moving there, creating an environment more conducive to investment, growth, and prosperity. Growth in construction jobs was generally higher in fast-lane economies. In China, India, and Vietnam, the share of workers in construction increased by five to 12 percentage points.
Well-managed cities have all the ingredients to activate the virtuous cycle of rising productivity, income, and demand. As workers move to cities and secure better, more productive jobs, they earn the higher wages that boost both savings and consumption. Higher consumption gives business the incentive to invest, and savings fund the investment—which, in turn, makes workers more productive, restarting the cycle.
Across our sample of 54 economies, an average of roughly one-sixth of the workforce left agriculture from 1997 to 2018. In China, agriculture fell from 50 to 27 percent of the workforce, with 150 million people leaving the sector.61 Vietnam’s share dropped from 70 to 38 percent, and Romania halved its share, from 40 to 19 percent.
Urbanization’s productivity boost in emerging economies is due both to workers leaving the low-productivity agriculture sector (the mix effect) and to better performance in the agriculture sector itself (the within effect) as it mechanized or lost redundant labor (Exhibit 16). In fastlane economies, agriculture contributed to roughly one-third of all productivity growth from 1997 to 2018. In these economies, across regions, the employment share and often even total employment in agriculture decreased, yet total output nearly doubled.
In emerging economies where urbanization started earlier, the productivity impact of agriculture was understandably lower. In 1997, Central and Eastern European economies had a relatively small 17 percent share of workers in agriculture, on average, and Latin American economies 23 percent. The sector contributed about or less than half a percentage point to total productivity growth.
Growing service-sector jobs have distinctively high productivity growth in fast-lane economies
Across lanes, most of the workers leaving agriculture entered services. But fast-lane economies invested to enhance the productivity of these service sectors even as they industrialized.
One central tenet of development economics is that industrialization is the main way to boost productivity growth; by contrast, increasing service-sector productivity is hard.62 While manufacturing is still extremely relevant, we find that many fast-lane economies achieved notably high productivity growth in services, too.
Reallocating workers toward services in itself does not always translate into a large productivity boost. In fact, in most cases, more than 60 percent of the workers who entered services went into relatively low-productivity subsectors such as wholesale and retail trade or transportation.63 For example, while 15 percent of China’s workforce entered services between 1997 and 2018, that added only 0.2 percentage point to productivity growth, as about 80 percent of the workers joined low-productivity services.
What matters to the success of fast-lane economies is the push to raise productivity within services (Exhibit 17). This includes gains in the lower-productivity service sectors mentioned above (such as the spread of modern-format stores in retail) as well as in higher-productivity sectors such as business and financial services.
A substantial share of fast-lane productivity gains was likely due to investment in physical and human capital. India’s early upgrading of digital infrastructure and workforce skills in the 1990s enabled it to become a global IT leader, especially in software, for example.64 Other types of infrastructure, such as transport services, matter as well. Central and Eastern European economies raised productivity in services markedly due in no small part to their ability to attract significant foreign direct investment.65
In fast-lane economies, manufacturing sectors have become more sophisticated and global
Fast-lane economies of different income levels were able to outpace other emerging economies in the race to industrialize. They raised growth in manufacturing productivity—and output—largely through building more complex supply chains, producing more sophisticated products, and plugging into global value chains.
Whether economies can still industrialize their way to prosperity, as some East Asian economies did in the past, is an ongoing and lively debate in development economics.66 Our findings suggest that manufacturing, including via exports, has continued to be a common way for emerging economies to raise productivity, despite only rare instances in the past quarter century in which the sector significantly expanded employment. In contrast to services, the share of manufacturing jobs in fast-lane economies, except for a few that started from a very low base, either stayed flat or fell (Exhibit 18).67
In China, manufacturing was the single most important driver of productivity, adding 2.6 percentage points in annual growth. Manufacturing also contributed strongly to productivity growth in fast-lane Central and Eastern European economies such as Romania (1.4 percentage points), Slovakia (1.4 points), and Poland (1.0 point).
These gains were achieved, in many cases, once economies already had a relatively large manufacturing sector (about 20 percent of total employment), without increasing the sector’s share of employment. In fact, in three of the six fast-lane economies in our sample, the sector’s share of workers actually fell or held steady: China went from 22 to 20 percent, Türkiye dropped from 20 to 18 percent, and Poland stayed at 22 percent.68 India experienced very limited growth in manufacturing’s share of employment, starting from a low base. Only Ethiopia and Vietnam, starting even lower, managed to grow their manufacturing employment substantially.
Manufacturing provides a channel for the kind of investment in R&D and innovation that helps drive overall productivity growth; trade in manufactured goods within a global value chain accelerates that growth. A strong manufacturing sector also enables economies to produce the basic materials and capital goods they need for urbanization, infrastructure, and mechanization in other sectors. Fast-lane economies pursued each of these factors more than those in the slower lanes; many of the latter relied more on commodity exports.
R&D-rich, globally integrated manufacturing supports the evolution to a more diversified and sophisticated economic fabric. Indeed, fast-lane countries have above-average economic complexity, a measure of the diversity and sophistication of the products that an economy is capable of producing. This capability is an indication of a country’s economic development and competitiveness.69 China has increased its economic complexity toward advanced-economy levels (Exhibit 19).
Trade in manufactured goods amplifies the productivity dividend, especially when it is part of a global value chain. Trading firms learn faster and are more competitive at home and abroad.70 When they are part of a global value chain, companies are also able to specialize in core tasks and access inputs and knowledge from their foreign partners. Greater exports are also an important source of demand, providing economies with the incentives and revenues to invest in capital goods and technology.
Where fast-lane economies benefit from economic complexity and trade, slow-lane economies may suffer from excessive reliance on resources. On average, 78 percent of the goods exported by slow-lane economies are commodities, about double the share in fast-lane economies and advanced economies.71 This dependence makes economies more vulnerable to global shocks and impedes their industry-driven productivity growth.72 High-value commodity exports also put upward pressure on the exchange rate, making exports less competitive. This, in turn, discourages investment in tradable sectors and accelerates the growth of nontradable services.73
Solid and improving enablers pave the way to the fast lane
Strong investment and productivity growth can only be built on a firm foundation. Knowing the necessary conditions for economic development and growth is the holy grail of economics. The drivers are many, and the circumstances and extent to which they drive productivity growth are hotly debated. Some research institutions have built lists of productivity drivers, including the World Economic Forum’s Global Competitiveness Index of 12 drivers and the World Bank’s 2019 Global Productivity framework of ten.74 There is also a question about whether it takes a certain level of each enabler to achieve a large acceleration in productivity or whether improvements in each driver are enough. The answer is probably a combination. In this section, we focus on three enablers: institutions, innovation (through R&D), and human capital.
Effective institutions are fundamental to long-run growth, through both effective public intervention and creating the rules of the game in which businesses invest and thrive. From the vast literature on institutions and productivity growth,75 we have selected pillar 1 from the World Economic Forum’s Global Competitiveness Index to analyze our lanes. This pillar, measuring the relative strength of institutions, includes metrics for government performance, property rights, transparency, security, and a lack of corruption, among other things.76 On a scale from 0 (worst) to 100 (best), the average score of advanced economies is 71. Fast-lane economies have an average of 56, middle-lane economies 52, and slow-lane economies 48.
Investment in R&D is a simple proxy for an economy’s capacity to innovate. Fast-lane economies invest on average nearly 1 percent of their GDP in R&D, compared with 0.6 percent and 0.4 percent by middle- and slow-lane economies.77 China has dramatically increased investment in R&D, from 0.6 percent of GDP in 1997 to 2.2 percent in 2019, matching the advanced-economy average for that year. Economies in Central Europe lifted their R&D investment from 0.6 percent to 1.0 percent over that quarter century. Economies in Latin America, many of which are in the slow lane, invest only 0.2 percent of GDP in R&D. The region accounts for less than 2 percent of the world’s patent applications, and of these, less than one-fifth are filed by Latin Americans.78
The third enabler we examined is education, or productive investment in human capital.79 Ample literature supports the relevance of human capital as a driver of economic development.80 A simple measure of education is learning-adjusted years of schooling in the working population. Advanced economies average about 11.0 years, fast-lane economies 9.0 years, middle-lane economies 7.5 years, and slow-lane economies 6.0 years.
Regions with an overrepresentation of slow-lane economies are significantly weaker when it comes to these enablers. For example, Latin America’s growth has long been held back by underdeveloped financial sectors and certain regulations that block investment. Weak public institutions and governance also limit government capacity to reduce the region’s considerable gaps in human capital, technology, and infrastructure.81
Similar factors affect economies in Sub-Saharan Africa, despite significant differences in income levels. Political instability can add to this story. Previous MGI work found that coups and other political events affected 30 percent of Africa’s population in the 2010s, compared with 4 percent in the 2000s.82 After peaking in 2008, foreign direct investment flows into Africa declined in 31 of Africa’s 54 economies, falling fastest in the continent’s two largest economies, Nigeria and South Africa.
Strong and improving foundations in institutions, education, and innovation are three of the most relevant enablers of productivity growth. They require—and also unleash—the necessary investments that are critical to moving economies into the fast lane.
4. An agenda for productivity growth in a changing geo-economic era
Our diagnosis suggests priorities for advanced economies: a focus on revamping investment and harvesting the productivity dividend from digital and other technologies such as AI. Conversely, commonly raised solutions such as reshoring manufacturing and trying to influence the sector mix are less likely to reaccelerate productivity growth. Improving how we measure GDP and productivity is a worthwhile pursuit, but the drivers of the slowdown outlined in this research have been real and keenly felt regardless of measurement.
We also outline the priorities for emerging economies to get to the fast lane: boost capital investment, build on that investment to urbanize effectively, grow the productivity and size of the service and construction sectors, and increase the sophistication and global interconnectedness of manufacturing.
In this last section, we explore the future of productivity growth by posing seven questions. Because we cover the full range of global economies with different characteristics, we necessarily focus on general points. The first two questions—linked to investment and technology—focus on what is needed to reverse the slowdown and position economies for high productivity growth in a changing era. The final five explore how future productivity growth will be shaped by the big puzzles on the horizon: shrinking and aging populations in many economies, including most advanced economies and China; new ways of working; the growing importance of services; trade tensions and supply-chain disruptions; and energy costs.
1. Can we revamp investment and demand in a changing macro environment?
If there is a common thread in this report, it is the importance of investment. Fully half of the drop-off in productivity growth in advanced economies is a slowdown in capital deepening (that is, the growth of capital per worker). High capital deepening is also the key characteristic of emerging economies in the fast lane.
Investment flows best in “high-pressure” economies that enjoy strong demand, strong growth, and low unemployment. Inflationary pressure and rising interest rates could be signs that we are leaving behind secular stagnation and entering an era of higher demand and investment. Higher real wages may motivate more capital investment, too.83 Although it is too soon to tell, some signs appear positive, particularly in the United States. Real GDP beat expectations by growing at annualized rates of 4.9 and 3.3 percent in the third and fourth quarters of 2023, respectively; this was largely driven by equally high productivity growth.84 Aggregate metrics show that investment is up from pandemic lows, though it still has a long way to go. Anecdotally, the big five US tech firms spent $350 billion among them on R&D and capital expenditures in 2022, as part of a race for supremacy in AI and the cloud.85 Construction activity in the US manufacturing sector is two to three times its normal level, driven in part by a rush to build battery supply chains.86
Advanced economies might also tilt regulatory conditions in favor of investment and innovation. Priorities would include reducing unwarranted burden and complexity (for example, for permits to build renewable power), more effective market regulation, fixing land markets to facilitate building, and better intellectual property and competition policies. Creating the right balance of competition and entrepreneurship would motivate new waves of investment. In the United States, business dynamism shot up in 2020 and kept pace through 2023.87
Emerging economies would benefit from public and private investment in urban infrastructure and in the public services and worker skills that make cities function. While people moving from farms to cities is a major lever for productivity growth, it can result in “sterile agglomeration” without the right hard and soft investments.88 The focus can also extend to secondary cities with large potential.89 This requires creating savings or borrowing power to unleash that investment. However, emerging economies may find funding hard to come by. In the aftermath of the COVID-19 crisis, growing debt distress could be a limitation, and investors may be more attracted to the higher interest rates available again in advanced economies.90
An attractive business environment therefore becomes even more important. This includes low corruption, nimble regulation, high-quality financial markets, and macroeconomic stability, all of which have proved to be persistent challenges in many parts of the world. Solving these issues would not only help attract foreign capital but also activate the virtuous cycle of rising productivity, incomes, demand, and domestic savings. Greater investment in a more favorable business environment would help businesses grow, allowing them in turn to invest in productive capital, hire and develop talent, pay higher wages, and compete in international markets. Developing large leading firms while keeping up competitive pressure would be a major spur of productivity growth in emerging economies.
2. Can we harness the promise of technology for a more productive future?
La productividad tiende a acelerarse en oleadas. Como se ha mencionado, la digitalización y otros avances tecnológicos podrían añadir entre 0,5 y 1,0 puntos porcentuales al crecimiento anual de la productividad en las economías avanzadas.91 La adopción temprana de avances recientes como la IA generativa podría añadir un impulso adicional de más de 0,5 puntos porcentuales en todas las economías avanzadas (y en varias emergentes) al transformar la forma en que se realizan los trabajos.92
La digitalización ha sido la principal promesa de impulso de la productividad en la última década, pero sus beneficios sólo se materializarán más allá del sector de las TIC con una destrucción creativa más rápida, cambios en la cuota de mercado y la adopción de tecnologías, ideas y mejores prácticas. Aunquela dirección y el impacto de la IA son inciertos (y las grandes afirmaciones sobre cualquier nueva solución tecnológica suelen ser exageradas), ya han surgido varios casos de uso que han demostrado mejorar la productividad.
En las economías emergentes, una adopción más amplia de las tecnologías existentes -por ejemplo, los teléfonos inteligentes- en lugar de la innovación de frontera puede ir aún más lejos en el impulso de la productividad, pero a veces este proceso lleva tiempo y debe superar barreras. Por ejemplo, América Latina ha sido en general una región que ha llegado tarde a las tecnologías. Pero la pandemia impulsó la adopción de tecnologías como los pagos digitales y el comercio electrónico, lo que podría desencadenar un crecimiento de recuperación. Sin embargo, a medida que despegan tecnologías de vanguardia como la IA, la región corre el riesgo de quedarse rezagada una vez más: las estimaciones sugieren que el impacto de la IA en la economía de América Latina será de tres a cinco veces menor que en América del Norte y China.95 En África también abundan las oportunidades en la adopción de tecnología digital. Las tecnologías más sencillas, no digitales, también pueden impulsar significativamente la productividad. Una mayor inversión en irrigación y fertilizantes, por ejemplo, promete mucho para los sectores agrícolas africanos.9
3. Can we reshape the effects of aging on productivity?
La demografía seguirá afectando tanto a la oferta (disponibilidad de trabajadores y productividad individual) como a la demanda (gasto de los consumidores) de la economía y, por ende, a la productividad agregada. Aunque no hay consenso en la literatura, los estudios sugieren que los trabajadores jóvenes se vuelven más productivos a medida que envejecen y luego disminuyen su productividad a medida que se acercan a la jubilación, con un punto de inflexión que varía según los sectores. Sencillamente, no es bueno ser demasiado joven, porque los trabajadores carecen de los efectos de aprendizaje que vienen con la experiencia, pero tampoco es bueno ser demasiado viejo, porque muchas ocupaciones muestran picos de productividad a mediana edad. Las estimaciones basadas en estudios econométricos presentan algunas dificultades, y los intervalos encontrados son amplios (desde un impacto positivo del envejecimiento en el crecimiento de la productividad hasta un arrastre de la productividad de 0,5 puntos porcentuales al año, dependiendo de la economía y el periodo de tiempo)97.
A nivel mundial, el número de personas en edad de trabajar por cada persona mayor de 65 años se reducirá de 6,6 en 2022 a 3,8 en 2050.98 Las economías avanzadas y China, en particular, se encuentran ahora en una marcha sincronizada hacia el envejecimiento.99 Esto supone un riesgo para el crecimiento de la productividad a menos que las empresas y los responsables políticos trabajen para mitigar o invertir los efectos del envejecimiento a través de la reconversión profesional, el replanteamiento de las políticas de jubilación y otros medios. También podrían centrarse en la creciente "economía plateada" de los consumidores de más edad, creando nuevos mercados con más y mejores productos y servicios.
Las economías emergentes con una mano de obra joven y en rápido crecimiento poseen un gran activo. Su talento tiene el potencial no sólo de aumentar la productividad nacional, sino también de apoyar el envejecimiento de la población en otros lugares. África, hogar de la población más joven y de más rápido crecimiento del mundo, añadirá casi 800 millones de personas a su población activa en 2050, superando a China e India 100.
4. Can we make hybrid work work?
Durante la pandemia, la gente trabajó desde casa en cantidades significativas, quizá por primera vez, y parte de este cambio se ha mantenido. Aún está por ver el impacto a largo plazo del trabajo híbrido en la productividad, aunque podría ser positivo si se estructura y gestiona adecuadamente.
La investigación muestra que los efectos del trabajo a distancia son muy sensibles al sector, la función y la actividad. En el caso del trabajo totalmente a distancia, la mayoría de los estudios muestran una pérdida de productividad por hora, que puede compensarse con más horas trabajadas al ahorrarse tiempo de desplazamiento. La mayoría de los estudios muestran que los acuerdos híbridos tienden a aumentar la productividad si se organizan y gestionan adecuadamente. Por un lado, la innovación en las primeras fases y la lluvia de ideas se benefician del intercambio in situ, al igual que la formación y la tutoría, sobre todo para los nuevos empleados. Por otro lado, trabajar a distancia algunos días tiene una serie de ventajas: fomenta la conectividad entre oficinas y entre países; puede hacer que los trabajadores más contentos se esfuercen más; permite un entorno doméstico más tranquilo para determinadas tareas; y ahorra tiempo gracias a menos desplazamientos, descansos más cortos y menos bajas por enfermedad.101
Además, el trabajo a distancia abre la opción de externalizar completamente los puestos de trabajo a las economías emergentes, especialmente en el sector servicios, lo que puede impulsar una nueva ola de deslocalización para las economías que cuenten con el talento y la infraestructura adecuados.
5. Can we drive productivity in services?
Aumentar la productividad de los servicios es un gran rompecabezas. Las economías son cada vez más intensivas en servicios, entre otras cosas porque la industria manufacturera implica menos puestos de trabajo a medida que se vuelve más productiva. Como hemos establecido, el efecto mixto en algunas economías avanzadas ha ejercido un pequeño lastre constante sobre el crecimiento de la productividad. (Véase el recuadro "Una visión detallada por sectores económicos de la desaceleración de la productividad y el efecto mixto" en la sección 2.) Las economías avanzadas han estado reponderando hacia los servicios durante décadas, y esta tendencia es ahora evidente también en la mayoría de las economías emergentes.
In any case, it is challenging for economies to influence their sector mix. Sector specialization depends on deep economic forces that are not simple to modify, and, more important, sector growth rates reflect changes in consumption patterns. This is why making services more productive is a more reliable and sustainable way to raise the aggregate productivity of the economy than other approaches.
For slow-growing emerging economies, solving this puzzle may be even more crucial. Even if opportunities exist, not every economy will be able to secure a manufacturing role in global supply chains to employ 15 or 20 percent of the population, especially as manufacturing becomes more automated. While manufacturing will remain an important source of productivity growth, services (both domestic and for export) will be crucial—probably increasingly so. Following the model of India, the mass export of digital and other services may be an option for several economies, both to increase overall productivity and to reduce dependence on volatile commodity exports.
6. Can we maintain high global cooperation?
The integration of global value chains unlocked huge productivity gains, both in the OECD and where new manufacturing capabilities were built. And while markers of global integration for physical goods plateaued in the years following the GFC, flows of services, data, and people have been steadily increasing. However, the pandemic interrupted global cooperation, which continues to be shaken by trade tensions, protectionist policies, wars, and other geopolitical events.102 If globalization recedes, it could hamper productivity growth in both advanced and emerging economies.
How global supply chains will reconfigure in the future is uncertain, and the shape of this reconfiguration will matter for productivity growth. If trade fragments along geopolitical lines, the impact on global growth may be substantial; some economies could lose up to 6 percent of GDP due to trade effects alone.103 The long-term impact on productivity growth could be more substantial if we also consider barriers to cross-border investment and reduced diffusion of ideas and technology across the globe.104 Meanwhile, there are indications that some emerging economies are beginning to assume larger roles in global trade networks. Annual greenfield investment in Africa (mainly North Africa) and India has surged by 109 percent and 54 percent, respectively, relative to prepandemic averages. Future reconfiguration may enable a new wave of economies to move into the fast lane, shifting them from commodity dependence to more complex exports.
Finally, industrial policies that promote the reshoring of manufacturing in some advanced economies are on the rise but may not cause higher productivity growth.105 It was an offshoring wave—with employment growth falling while output kept growing—that led to fast productivity growth in the late 1990s and early 2000s. Trying to recover manufacturing jobs is unlikely to help productivity, since it is precisely the less productive tasks (and hence jobs) within global value chains that are generally offshored.
7. Can we reenergize productively?
Global economies have embarked on one of the largest energy transitions in history, and it is uncertain if this will be a tailwind or a headwind for productivity. High energy intensity is key as economies industrialize. However, most advanced and several emerging economies have now decoupled their economic growth from greater energy usage.106 Energy costs account for only about 6 percent of GDP, meaning even large swings in energy costs may have a muted impact on productivity growth.107
In any case, in the short run, the increasing cost of energy, materials, and other resources weighs negatively on productivity. Managing the intermittency of some renewable sources can be costly, too. Investments to speed up the transition that are not yet “in the money”—and may take years or decades to yield positive returns—do not help productivity, either.
However, investment in clean energy and innovation can spur significant productivity and efficiency increases, particularly in the longer run.108 Productivity-enhancing benefits from energy-efficiency investments include increased output yields, shorter process cycle times, improved product quality, and improved machinery performance.109 While intermittence is a current limitation of many clean energy sources, generation costs have already fallen substantially, and the electrification of transportation, industry, and heating could lead to higher conversion efficiency. Additional productivity spillovers may emerge. For example, building electric vehicles requires less labor than building internal-combustion-engine vehicles.110
The need for critical new resources can also produce regional shifts and benefit some emerging economies, if well managed. Latin America, for instance, has a unique opportunity to support global decarbonization since it holds about half of the world’s lithium, 36 percent of its copper, and 16 percent of its nickel, all of which are critical for the net-zero transition.111
Productivity growth is much more than an economic concept: it is at the core of shared prosperity. Businesses and policy makers in advanced and emerging economies alike need to take action and create the conditions to boost investment, which underlies the technological, economic, and social transformations that drive productivity. This will be critical as the world wrestles with the challenges and opportunities brought by the next era.
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