The Global Productivity Slump: Common and Country-Specific Factors

Abstract

Productivity growth is slowing around the world. In 2015, the growth of total factor productivity (TFP) hovered around zero for the fourth straight year, down from 1 percent in 1996-2006 and 0.5 percent in 2007-12. In this paper we identify previous episodes of sharp and sustained decelerations in TFP growth using data for a large sample of countries and years. TFP slumps are ubiquitous: We find as many as 77 such episodes, depending on definition, in low-, middle- and high-income countries. Low levels of educational attainment and unusually high investment rates are among the significant country-specific correlates of TFP slumps, and energy-price shocks are among the significant global factors.