OECD Compendium of Productivity Indicators 2015

OECD

• Publisher: OECD
• Year: 2015
• eBook ISBN: 9789264234956
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

Chapter 1. Economic growth and productivity

• Size of GDP
• Growth in GDP per capita
• Gaps in GDP per capita
• Labour productivity
• Alternative measures of labour productivity
• Capital productivity
• Growth accounting
• Multifactor productivity

Size of GDP

Gross Domestic Product (GDP) is the standard measure of the value of final goods and services produced by a country during a period minus the value of imports. GDP per capita is a core indicator of economic performance and commonly used as a broad measure of average living standards or economic well-being.

Key facts

In 2013, the size of GDP for the OECD as a whole was about USD 47 700 billion based on current PPPs. In the same year, GDP per capita for the OECD area was USD 37 848. Four countries recorded GDP per capita in excess of USD 50 000 in 2013 – Luxembourg, Norway, Switzerland, and the United States while in 18 countries, GDP per capita was below the OECD average. GDP per capita for Turkey and Mexico was less than half the level of the OECD total.

Since the outset of the financial crisis in 2007, GDP growth has slowed in all OECD countries compared with the 2001-07 period.

Definition

Countries calculate GDP in their own currencies. In order to compare across countries these estimates have to be converted into a common currency. Often the conversion is made using current exchange rates but these can give a misleading comparison of the true volumes of final goods and services in GDP. A better approach is to use purchasing power parities (PPPs). PPPs are currency converters that control for differences in the price levels of products between countries and so allow an international comparison of the volumes of GDP and of the size of economies.

Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

Comparability

The measure of GDP is overall comparable across countries, although not all countries have yet implemented the latest international standard (the 2008 SNA) which can impact on comparisons of GDP. The measurement of the non-observed economy can also affect comparability, but for OECD economies, in general, this is not thought to be significant.

Population estimates are comparable across countries. However, some care is needed in interpretation: for example Luxembourg and, to a lesser extent, Switzerland have a relatively large number of frontier workers. Such workers contribute to GDP but are excluded from the population figures, which is one of the reasons why cross-country comparisons of income per capita based on gross or net national income are also relevant.

Sources and further reading

OECD National Accounts Statistics (database), http://dx.doi.org/10.1787/na-data-en.

Figure 1.1. Gross domestic product, current PPPs and current exchange rates

The seven largest economies in the OECD, percentage of OECD total, 2013

StatLink http://dx.doi.org/10.1787/888933203347

Figure 1.2. Growth in gross domestic product

Volume, percentage change at annual rate

StatLink http://dx.doi.org/10.1787/888933203354

Figure 1.3. GDP per capita

US dollar per head of population, current prices and current PPPs, 2013

StatLink http://dx.doi.org/10.1787/888933203366

Growth in GDP per capita

Gross Domestic Product (GDP) per capita measures economic activity or income per person and is one of the core indicators of economic performance. Growth in GDP per capita can be broken down into a part which is due to growth in labour productivity (GDP per hour worked) and a part which is due to increased labour utilisation (hours worked per capita). A slowing or declining rate of labour utilisation combined with high labour productivity growth can be indicative of a greater use of capital and/or of structural shifts to higher-productivity activities.

Key facts

Differences in GDP per capita growth across OECD countries over the last two decades can be mainly attributed to differences in labour productivity growth, as measured by growth in GDP per hour worked. In contrast, labour utilisation has increased in only a few countries and at a much slower pace.

The picture has been more varied since the outset of the financial crisis in 2007. In some countries, declines in GDP per capita have gone hand-in-hand with substantial falls in labour utilisation rates.

Definition

Growth in GDP per capita is calculated using GDP and population estimates published in the OECD National Accounts Statistics (database). Labour utilisation is defined as hours worked per capita. By default, total hours worked are derived from the OECD National Accounts Statistics (database), but for some countries, for which long time series are not available, data from the OECD Employment and Labour Market Statistics (database) are used (see Annex B).

Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

Comparability

Most OECD countries derive annual estimates of real GDP using annually chain-linked volume indices. Mexico however currently produces fixed-base volume estimates with the base year updated less periodically. The System of National Accounts recommends the production of estimates on the basis of annual chain volume series. These produce better estimates of growth as the weights used for the contribution of different goods and services are more relevant to the period in question.

Sources and further reading

OECD Employment and Labour Market Statistics (database), http://dx.doi.org/10.1787/data-00303-en.

OECD National Accounts Statistics (database), http://dx.doi.org/10.1787/na-data-en.

OECD Productivity Statistics (database), http://dx.doi.org/10.1787/pdtvy-data-en.

OECD (2001), Measuring Productivity – OECD Manual: Measurement of Aggregate and Industry-level Productivity Growth, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264194519-en.

Pilat, D. and P. Schreyer (2004), “The OECD Productivity Database: An Overview”, International Productivity Monitor, No. 8, Spring, CSLS, Ottawa.

Figure 1.4. Contributions to growth in GDP per capita

Total economy, percentage change at annual rate

StatLink http://dx.doi.org/10.1787/888933203377

Gaps in GDP per capita

GDP per capita levels are typically used to compare living standards across countries. Differences in GDP per capita levels across countries can arise from differences in labour productivity levels and from differences in labour utilisation (hours worked per capita). The latter can represent differences in unemployment and participation rates of the working age population, on the one hand, and working hours per employed person, on the other.

Key facts

Very high growth rates in GDP per capita have meant that countries with initially lower GDP per capita levels have converged towards average income levels in the OECD. This has been particularly true for Estonia, Poland, the Slovak Republic, and Chile. Nevertheless, in 2013, differences in incomes remained significant across OECD countries. GDP per capita was more than 50% lower than the OECD average in Chile and Turkey, while it was more than twice the OECD average in Luxembourg, 70% higher in Norway and 52% higher in Switzerland.

Most of these differences in GDP per capita reflect differences in labour productivity levels. Among the countries presented, seventeen (the majority being non-EU countries) had higher labour utilisation levels than the OECD average, narrowing their negative or reinforcing their positive gap in GDP per capita. This was notably the case for Korea, Luxembourg, Iceland and Switzerland.

Definition

GDP is measured as gross value added in market prices. Total hours worked used to calculate labour productivity are based on actual hours worked (see Annex B). Labour utilisation is defined as actual hours worked per...

Table of contents

• Title page
• Legal and rights
• Foreword
• Executive summary
• Reader’s guide
• Chapter 1. Economic growth and productivity
• Chapter 2. Productivity by industry
• Chapter 3. Productivity, trade and international competitiveness
• Chapter 4. Productivity trends
• Annex A. Productivity measures
• Annex B. Measuring hours worked
• Annex C. Capital input measures at the OECD
• Annex D. The System of National Accounts 2008
• Annex E. Measuring producer prices and productivity growth in services
• Annex F. Trends
• About the OECD