The Draghi report assigns slow EU productivity growth to a large range of factors. He mentions in particular the tech sector
““…the productivity gap between the EU and
the US is largely explained by the tech sector. (p.2)
“The EU economy has traditionally been
strong in all mid-technology sectors” (p.20)
2. So what do the data say? We have used EUKLEMS/INTANProd
as follows.
3.
Split the economy up into
a.
ICT equipment manufacturing: C26. Call this ICT manufacturing
b.
Information services. Sector J: writing software, making movies
etc. call this ICT services
c.
Everything else. Call this ICT using
4.
Write productivity growth as a share-weighted
average of productivity growth in all the sectors
Where the shares are shares in value-added and the same
equation applies for TFP growth.
5.
Average annual growth rates, 1997-2019 are below
for the US, EU9 (9 major EU countries) and the UK
|
US |
share in GVA |
LPG |
TFPG |
|
ICTusing |
87% |
1.91 |
0.44 |
|
ICTmfr |
3% |
12.90 |
10.40 |
|
ICTsvc |
10% |
4.88 |
1.86 |
|
Total |
|
2.51 |
0.85 |
|
|
|
|
|
|
EU 9 |
|
|
|
|
ICTusing |
91% |
1.02 |
0.15 |
|
ICTmfr |
2% |
6.43 |
5.14 |
|
ICTsvc |
7% |
3.08 |
1.86 |
|
Total |
|
1.25 |
0.35 |
|
Total with : |
|
|
|
|
US shares |
|
1.57 |
0.46 |
|
with US prod |
|
2.29 |
0.69 |
|
|
|
|
|
|
UK |
|
|
|
|
ICTusing |
89% |
1.32 |
0.20 |
|
ICTmfr |
1% |
12.00 |
11.30 |
|
ICTsvc |
10% |
7.67 |
6.72 |
|
Total |
|
2.08 |
0.98 |
|
Total with : |
|
|
|
|
US shares |
|
1.64 |
0.52 |
|
with US prod |
|
2.35 |
0.71 |
Where the colums are
a.
The share of that sector in the total economy
b.
Average labour productivity growth (LPG)
c.
Average TFP growth (TFPG)
And the row marked total is the weighted average.
The table tells us:
a.
The US has a higher GVA share of ICT manufacturing
and ICT services.
b.
But it also has higher productivity in those
sectors than the EU (but not the UK).
c.
Thus the italics show two counterfacturals
a.
EU and UK productivity growth with the US shares
(but EU and UK productivity growth)
b.
EU and UK productivity growth with the US productivity
growth (but EU and UK productivity shares)
What do we find?
a.
Most of the EU/US gap is not because of industrial
structure. If the EU had the same
industrial structure as the US, it would only close about 25% of the productivity
gap. The problem is that the EU has lower
productivity within those sectors (and low productivity in the ICT-using
sector)
b.
The UK by contrast is closer in industry structure
to the US and has high productivity in these
sectors. The UK problem is low productivity in the ICT using sector.
