The Mystery of Low Productivity Growth: Some Insights from Belgium

Transcription

1 The Mystery of Low Productivity Growth: Some Insights from Belgium Bank of Poland - 26 October 218 Luc Dresse (luc.dresse@nbb.be) Chief Advisor Economics and Research Dept.

2 LU BE US NL DK DE FR SE EU15 AT FI UK ES IT EL PT PL 1. Setting the scene Belgium: a productive economy 12 Apparent labour productivity (USD/hour worked) Total factor productivity distribution (21, private sector, thousand) Source: Conference Board. Source: CompNet. 2

3 but productivity gains have lost steam 4, GDP per hour worked (percentage changes in real terms, average annual growth rate) 3,5 3, 2,5 2, 1,5 1,,5, United States Japan Euro area (1) Belgium Sources: Conference Board, OECD. (1) 216 for the euro area. 3

4 Cumulated change (percentages) High level / low growth? GDP per hour worked (USD) RO LV LT EE 12 1 PL SK IE BG CZ SI HR MT HU US SE FI UK AT DE CY NL PT FR EL CN BE ES DK IT Level in 1995 Source: Conference Board. 4

5 The slowdown of productivity: a source of concern for an Eurosystem s national central bank Monetary policy: lower natural real interest rate Citizens welfare: lower growth income per capita Fiscal sustainability 5

6 TFP growth and fiscal sustainability Age-related costs for Belgium (in % of GDP) AWG reference scenario Lower TFP growth (-.4 p.p.) +2,1p.p. Source: EU-Ageing Working Group (218 Report). 6

7 A widespread and multidimensional issue Capital deepening and TFP growth have decelerated (annual % point contribution; 5-year moving average) United States Japan Euro area Belgium Capital deepening Total factor productivity Labour productivity growth (%) Sources: OECD, Eurostat.

8 Explanations for the productivity slowdown? o Slower human capital accumulation o Waning ICT boom o Quid new digital technologies? o Efficiency R&D? o Slowing down trade integration o An ageing workforce 8

9 Resource allocation across firms in Belgium: Growing performance gap between frontier vs. non-frontier 19 TFP Total population of firms (1996 = 1) 19 TFP: Industry vs. Services (1996 = 1) Frontier firms Industry / Non-frontier Non-frontier firms Industry / Frontier Services / Non-frontier Services / Frontier 9 Frontier firms: productivity level above 9 percentile in the corresponding sector population for two consecutive years. Source: NBB.

10 Frontier firms are the main driver of aggregate productivity growth 2,5 Decomposition of aggregate PTF growth (Contributions in % points, annual average) 2, 1,5 1,,5, Frontier firms - Internal growth Frontier firms - External growth or reallocation Non-frontier firms - Internal growth -,5 Non frontier firms - External growth or reallocation -1, -1, Source: NBB. 1

11 Characteristics of firms and productivity: take-aways from firm-level analyses in Belgium Productivity performances and age Older firms are more productive than younger firms (selection effect) except for Gazelles Productivity performances and external openness TFP ranking: both importing and exporting > importing > exporting > domestically oriented Domestic network effect: close relationships with exporting firms increase productivity level Productivity performances and investment Human capital: Intangible: IT capital: especially in the industry and for large companies Zombie firms: (OECD definition) 1 % of # firms in BE, 13 % of employment, 19 % of capital Heterogeneous group But on average lower productivity level and lower productivity growth than firms with similar characteristics 11

12 4. Is mismeasurement behind the productivity slowdown? U.S. productivity growth: official and adjusted measures Measurement error is an issue Measurement issues affect the digital economy in particular Mismeasurement is unlikely to explain much of the productivity slowdown 12

13 Sharing economy (platform): a manifestation of digital economy Still limited size in Europe, but rapid growth 3 Value of transactions (in billion) 4 Platform revenues (in billion) % of households final consumption expenditure +77% 3 +97% % 1 +8% % 3% 7% 18% 54% Accomodation ("p2p") Transport ("p2p") Household services on demand Professional services on demand Finance collaborative 2% 7% 12% 47% 32% Source: PwC (216). 13

14 FR IE HR LV DE EE RO ES EU-28 BG IT HU AT PL SE DK SI LU NL LT SI EL BE PT FI UK CZ MT CY In Belgium as well, sharing economy is small compared to the economy 4 Use of a sharing economy platform (in % - 216) but the potential for rapid growth is large. This requires progress regarding the measurement issues. Source : EC Flash Eurobarometer 438 (216) The use of collaborative platforms. 14

15 Conclusion Stylised facts in Belgium largely shared with other advanced economies Allocative efficiency is important o Business and Human capital Measurement issues: keep information system apace with digital revolution o o o Concepts Methodologies Data collection 15

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