There is no magical path to higher productivity growth.

This disparity reflected some differences in productivity growth but even more so differences in wage growth.

Productivity growth makes many things possible.

High oil prices also threaten to slow long term productivity growth.

Indeed, productivity growth in India s service sector matches productivity growth in China s manufacturing sector, thereby reducing poverty by enabling wages to rise.

This means that the rich have been creaming off a giant share of productivity growth.

The reduction of poverty as well as working poverty are also dependent on productivity growth.

But, over the same period, annual GDP growth has averaged a modest 3.5 , and productivity growth has slipped into negative territory.

This is true even in services, despite slow productivity growth in Europe.

Productivity growth at the historical rate of 0.7 in Germany, with wage growth of 4 , would be compatible with an inflation rate a little above 3 .

And, despite the spike in unemployment, productivity growth in the eurozone is decidedly negative.

Productivity growth stems from enhanced adaptive capabilities to use modern technology and commercialize new knowledge.

Growing populations, climactic change and natural disasters had profoundly affected agricultural productivity.

A rapid reduction in unit labor costs, through structural reforms that increased productivity growth in excess of wages, is just as unlikely.

After a decade that saw wages grow faster than productivity, unit labor costs (and the real exchange rate based on those costs) appreciated sharply.

Italy s new leaders must address this situation by decoupling labor s contribution to productivity growth from that of capital and total factor productivity.

Unit labor costs reflect compensation levels and productivity gains in productivity can offset the effect of wage growth.

Innovation and rising productivity led to rapid growth of the economy, but it soon suffered from the effects of the Great Depression.

Rapid output growth without equally rapid capital stock or employment growth must have reflected rapid productivity growth.

Some people may argue that investment growth without consumption growth will result in overcapacity and eventually lead to recession.

Weak America Weakened Europe

Such reforms are essential to raise productivity growth and improve the Japanese economy s competitiveness. Four imperatives stand out.

The alternative is muted wage and income growth shared across the income spectrum, combined with productivity enhancing measures.

Wages have stagnated despite strong productivity growth, while the trade deficit has set new records.

The reallocation of workers to less productive service jobs has cost the British economy 0.5 points of productivity growth every year, a quarter of the total productivity gain over the period.

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 .

It is that service sector productivity growth has run at barely half the rate of the United States.

Indeed, insofar as the increments are small, the result is likely to be slower productivity growth and a Great Stagnation.

So, even if there are good reasons to expect a period of sub par investment and employment growth, this need not translate into slow productivity or GDP growth.

Service sector productivity growth in formerly manufacturing heavy Asian economies has been dismal by international standards.

Economies hooked on this model find themselves excessively specialized in primary products that promise little productivity growth.

When growth in productivity and consumption produces unsustainable depletion of the world's resources and harm to the ecosystem, it cannot be considered good.

The more trade unions defend existing wage structures, and the lower productivity growth is, the longer the slump will be.

Even structural reforms that will eventually increase productivity growth can be recessionary in the short run.

And even a real wage increase on the national level will not undermine competitiveness if labor productivity grows still faster.

This means that in order to compete successfully with China, Latin American countries will need to increase productivity growth.

Investments in infrastructure and human capital are the bedrock for increasing average productivity and for ensuring high growth over a sustained period of time.

In particular, they show that services have exhibited unconditional convergence in productivity recently. That is, countries furthest away from the global frontier of labor productivity have seen the fastest productivity growth in services.

US productivity has been growing at a respectable pace for two decades. The problem is that productivity gains have not translated into commensurate wage increases for the typical worker or income growth for the typical family.

The German solution to this conundrum keeping wage growth below that of productivity, thereby reducing unit labor costs took more than a decade to yield results.

From 1992 to 2011, labor productivity grew at an average annual rate of 0.9 , the lowest in the OECD.

All of the available data show that Germany had one of Europe s lowest rates of productivity growth over the last ten years.

This is very different from the conditional convergence that characterizes the rest of the economy, in which productivity growth is not assured and depends on policies and external circumstances.

Rapid productivity increases in manufacturing had outpaced growth in demand, which meant that manufacturing employment decreased.

Productivity performance did not vary dramatically between northern and southern European countries from 2000 to 2010 in fact, average annual productivity growth was faster in Greece than in Germany (1 versus 0.7 ).