Economic Growth in Industrialized Countries

Industrialized countries feature remarkably stable growth rates of income and living standards in the long run. The source of this continued success is a smooth process of productivity growth. What are the mechanisms underlying the continued growth in productivity in the rich part of the world? One much-debated question is whether productivity growth is mostly the result of organizational improvements and changes in work practices, or whether it is realized through adoption of ever more efficient equipment. CEP macro program member Rachel Ngai argues that once the productive structure of the intermediate-good sector is properly accounted for most of productivity growth can be explained by investment in more efficient equipment.

To read more about Rachel Ngai's research on productivity see "Mapping Prices into Productivity in Multisector Growth Models  [Full document in Adobe PDF] (L. Rachel Ngai and Roberto M. Samaniego), CEP Discussion Paper 0869, May 2008.