Productivity Growth, Convergence and Welfare: What the Long Run Data Show

TLDR

The study examines how productivity lag relates to deindustrialization, unemployment, and balance of payments. The authors analyze this relationship using historical data on productivity, deindustrialization, unemployment, and balance of payments. Maddison's 1870‑1979 data reveal unprecedented growth in productivity, GDP per capita, and exports, with remarkable convergence among industrialized market economies and planned economies but not among less developed countries; U.S. productivity growth fell behind its postwar peak yet likely stayed above its long‑term level, and faster growth in other countries may simply reflect convergence.

Abstract

Maddison's 1870-1979 data are analyzed, showing the historically unprecedented growth in productivity, GDP per capita and exports and the remarkable convergence of productivities of industrialized market economies, with convergence apparently shared by planned economies but not less developed countries. Productivity lag's relation to deindustrialization, unemployment and balance of payments is examined. The data confirm that U.S. productivity growth fell behind its extraordinary postwar peak but probably not below its long term level. It is also shown that more rapid productivity growth of other countries may only be a normal concommitant of convergence. Copyright 1986 by American Economic Association. (This abstract was borrowed from another version of this item.)