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Friday, May 20, 2005

U.S. Productivity

There have been several recent items in the blogosphere about U.S. productivity.

First. If you haven't seen the graph at Macroblog, (from the Financial Times) comparing changes in productivity in the U.S. vs. several European countries, go look at it. Labour productivity in the U.S. has grown considerably since 1987. It has declined in France, Germany, and Italy (dramatically so). And in the UK, it has increased very slightly. [link via Tyler Cowen at Marginal Revolution].

Second. The Emirates Economist also links to the Financial Times article, quoting:

Only in Europe and Latin America has productivity growth slowed....An intensification of the competitive process is doing good to most regions of the world,” said Bart van Ark, a professor at the University of Groningen in the Netherlands and one of the authors of the report. “The number of countries that participate in the world economy is now higher than it has ever been and some of the lower income regions can now exploit their comparative advantages in world markets.”
Third. Thomas Siems at the Dallas Fed shows that the growth in U.S. productivity has been especially great since 1997:

He later presents some compelling evidence that one reason (among others) for the phenomenal growth in U.S. productivity has been improved supply chain management. For example, where inventories are concerned,

His conclusion is quite optimistic:

The Power of ProductivityFurther improvements are on the horizon. Other new information technologies, like the global positioning system (GPS) and radio frequency identification (RFID), will continue to improve supply chains. This is true not only in manufacturing, but also in retail, insurance, health care and other industries. We are just beginning to see the power of productivity as firms effectively implement these new technologies.

... In our increasingly interconnected and interdependent global economy, the processes involved in delivering supplies and finished goods—including information and other business services—from one place to another are mind-boggling. But through information engineering, supply chain improvements have resulted in a reduced bullwhip effect, lower inventory levels, reduced logistics costs and streamlined payments. These improvements have led to macroeconomic benefits such as more stable economic output and stronger productivity growth.
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