International Productivity Monitor (Sep 2015)
Progress on the Mystery of Productivity: A Review Article on the OECD Report "The Future of Productivity"
Abstract
For decades the OECD has been a leader in the research of productivity and the development of policy ideas to strengthen it. Yet many countries, including Canada, that have implemented the OECD paradigm reasonably faithfully have not experienced strong productivity. Indeed, many OECD members, again including Canada, have experienced a decline in multi-factor productivity over the past 15 years. The record makes it fair to conclude that the OECD has not cracked the mysteries of productivity. So when the organization releases a new study under the bold title of The Future of Productivity certain questions are natural. Does the OECD have new and different perspectives to add? Will these perspectives lead to policy ideas that will succeed in raising productivity growth among member countries? The answer to the first question is a resounding yes. The OECD flags, quite appropriately, that the research needs to go beyond the so-called policy fundamentals and examine the behavior or firms, particularly why some firms so badly lag others in productivity. The OECD also now places much more emphasis on how human talent is allocated to jobs. This also seems promising. Whether such new directions of research will finally crack the mystery of productivity remains to be seen. But the OECD research program is heading in the right direction and warrants close attention.
