The productivity growth that was sustained through the downturn presented both an opportunity and a challenge.

The problem is more than just the tendency of productivity to grow more slowly in services than manufacturing.

While productivity growth usually is measured in fractions of a percentage point, wage increases have been much larger.

Sustained rapid growth is the result of poorer countries catching up to rich countries productivity levels not of growth in the rich countries themselves.

Those who predict generally low interest rates over the next generation point to rapid growth of productivity and potential output in the world economy.

But improvements in productivity are easily overwhelmed by changes in wages. While productivity growth usually is measured in fractions of a percentage point, wage increases have been much larger.

And India? If the growth rates of the past 15 years continue, and if India remains united, its labor productivity in 2050 will be comparable to that of Spain today.

Such efficiency gains from increasing the extent of the market and promoting specialization should have produced rapid growth in Mexican productivity.

But recent research suggests that about one third of China s economic growth comes from technological progress, or from the increase in total factor productivity.

These case studies will examine country specific productivity experience and provide an interpretation against the backdrop of these countries' overall growth performance.

The problem is more than just the tendency of productivity to grow more slowly in services than manufacturing. Service sector productivity growth in formerly manufacturing heavy Asian economies has been dismal by international standards.

Bureaucratic enterprises are typically allergic to taking big risks that is, developing and commercializing the radical innovations that push out the production possibility frontier and generate large sustained jumps in productivity and thus in economic growth.

Developing the service sector could also diversify the production base, thereby enhancing economic resilience and boosting growth momentum.

A vibrant private sector with enterprises making investments, creating jobs and improving productivity promotes growth and creates opportunities for poor people.

Rapidly expanding global trade, combined with an ever freer and faster exchange of people and ideas, has been a cornerstone of this growth, particularly of the strong productivity gains that underlie it.

According to recent research, however, about one third of growth in China now comes from technological progress, or an increase in total factor productivity.

Against this background, South Korea s new growth strategy should aim to achieve both a demand side rebalancing and supply side productivity increases.

As a result, economic growth and job creation remain lackluster, with the availability of investment finance for long term productive assets essential to sustainable growth severely limited.

In that region, increases in agricultural productivity, reductions in population growth, improved governance and economic growth would together serve to reduce poverty and hunger.

Developing countries need to grow, but nowadays it is easier to acquire capacity and grow through FDI than it is to develop domestic mass consumption markets.

The reason we have done so well is that annual productivity growth has been higher than Keynes projected about 1.6 for the UK, and a bit higher for the US.

The factors that drove the Putin era of rapid economic growth high and rising oil prices, cheap labor, and unused production capacity are all exhausted.

Other parts of Asia have also experienced growth, with 20 Mt. of expansion, while South American capacity has risen by 8 Mt. and Middle East capacity by over 10 Mt., which is a notable increase for the region.

Gordon s point is not that growth will decelerate in the future, but rather that underlying productivity growth moved to a sharply lower trajectory around the year 2000.

Assuming slower growth in the labor force than in the past decade, no rise in productivity due to capital accumulation, and a decline in multifactor productivity growth to its pre 2000 average implies that annual potential GDP growth will be only 1.4 .

Faced with sluggish external demand, weak domestic consumption, rising labor costs, and low productivity, China depends excessively on investment to drive economic growth.

Europeans, who were called on to improve productivity and raise domestic demand, reformed their economies at a glacial pace, while China maintained its export led growth strategy.

Many economies need to fix the financial sector and restore credit, while many more need to raise productivity in order to boost growth and create jobs.

In developing countries, import substitution as a way to jump start economic diversification can work for a while but, over time, as productivity growth lags and comparative advantage is over ridden, growth grinds to a halt.

Over the past three decades, the US has been able to grow at an average annual rate of around 2.5 . Some attribute relatively slow growth to demographic factors, which have reduced the labor force, as well as to weak productivity levels, which have been low.

Even in China and other parts of the world with growing manufacturing sectors, productivity improvements often related to job killing automated processes account for most of the growth in output.

A good rule of thumb for the average growth rates of the G 7 countries would be to attribute about one percentage point in productivity gains to the growth rate of the working age population.

Growth will not resume until production costs in the indebted countries decline, which requires either a substantial permanent increase in productivity, a reduction in real wages, or both.

Whereas economic development is a policy intervention endeavor with aims of economic and social well being of people, economic growth is a phenomenon of market productivity and rise in GDP.

In the absence of some miraculous improvement in productivity growth of the same order as the Internet or globalization, the world can expect a lengthy period of low growth and exceedingly difficult fiscal consolidation.

Building productive capacity, increasing international competitiveness and ensuring greater integration into the world economy is imperative for the economic growth of developing countries, especially LDCs.

In the second focus area of this service module, trade capacity building, emphasis will be placed on promoting the development of SME export consortia, comprising voluntary groupings of enterprises, usually in the same or similar business or subsector.

Paying for Productivity

These are key issues in the short term, but, as every economist knows, long run economic growth is determined mainly by improving productivity.

General description Economic growth, through accelerated growth of industrial productivity and enhanced capacity to trade, is necessary for poverty reduction and improved environmental sustainability in countries at different development stages.

The programme is aimed at promoting the transformation and diversification of micro and small scale enterprises to growth oriented activities, and at increasing the productive capacities of women and rural people to enable them to participate effectively in the national economies.

The ultimate irony is that there are simultaneously excess capacity and vast unmet needs and policies that could restore growth by using the former to address the latter.

In both Korea and Japan, to cite two key examples, the problem is not simply that productivity in services has grown barely a quarter as fast as it has in manufacturing for a decade.

The Coming Productivity Revolution

Today s Productivity Paradox