Past Event

Solving the productivity puzzle

This event featured the presentation of new research by the McKinsey Global Institute.

Date: May 23, 2018, 12:00 pm Topic: Innovation & Competition Policy

audio & video recordings


presentation

Presentation by Jan Mischke

summary

This event featured a keynote by Jan Mischke, presenting the latest McKinsey Global Institute study on the recent productivity-growth slowdown.
The study focuses on labour productivity differentials across France, Germany, Italy, Spain, Sweden, the United Kingdom, and the United States, and identifies three different dimensions of the slowdown:
• “wave 1”, when the productivity boom from the ICT revolution started waning;
• “wave 2”, a decline due to the aftermath of the financial crisis, in particular because of weak demand and uncertainty; and
• “wave 3”, which refers to delayed productivity gains of digitalization.
Cross-country differences were highlighted:
• Sweden and the US were mostly affected by the waning effects of the ICT revolution;
• the UK by a stop in its financial sector boom when the crisis hit;
• Germany and France (relatively less affected because starting from more moderate growth) by capital intensity;
• productivity growth in Italy and Spain was already stalling and did not decline further.
The study estimates potential future recovery in productivity growth of about 2%, of which a lot comes from unlocking demand growth and promoting digital diffusion. Downside risks lie mostly with long-term demand leakages.
He concluded by emphasising the need for policy makers to promote sustained demand and investment growth, as well as digital diffusion.
During the panel discussion, Dirk Pilat highlighted the importance of looking at micro-drivers of aggregate outcomes, and in this case at firm heterogeneity in terms of productivity growth, as while frontiers firms are performing well, the rest of the economy has found difficulty in catching up. Thus, he pointed out that promoting diffusion is fundamental. Moreover, he argued that innovation should not only be about technology, but also about organization and processes, and that in the EU stagnation in business dynamism also drags productivity growth down.
Janet Henry further highlighted that we may still suffering from a legacy of the financial crisis, as some laggard firms might still be a hangover from the lack of foreclosure by banks. Moreover, she stressed the issue of mismeasurement and that cheap labour may have been causing part of the slowdown, and that increasing wages might incentivize companies to invest more. She brought the example of fast-growing investment in robotics in China and in general that there is scope for catch up just by absorbing technology already used in the West.
Reinhilde Veugelers stressed that a major difference between today’s technological boom and the previous ones is that now China is a rising power in science and technology, and she wondered how this will affect the EU. She also highlighted that the EU partially failed to reap the benefits of the ICT boom because of lack of creative disruption, and that the EU model mostly allows for incremental growth rather than a disruptive one. She called for a single and open market not only for digital-producing sectors but also for all digital-using sector.
The discussion highlighted several issues including, among others, the need to build regulation in a way that allows for future technology, transition costs of digitalization, heterogeneity within and across sectors, and how to increase allocative efficiency while keeping social costs low.

Notes by  Francesco Chiacchio

Speakers

Maria Demertzis

Deputy Director

Janet Henry

Global Chief Economist, ‎HSBC

Jan Mischke

MGI Partner, Zurich

Dirk Pilat

Deputy Director, Directorate for Science, Technology and Innovation, ‎OECD

Reinhilde Veugelers

Senior Fellow

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

matilda.sevon@bruegel.org

Read about event More on this topic

Past Event

Past Event

Eurozone agreement: a mini revolution?

What does the new Eurozone budget do, and what does it not do? What are its strengths and weaknesses?

Speakers: Bruno Le Maire and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 8, 2019
Read about event More on this topic

Past Event

Past Event

Tech-enabled payment processes: policy implications of new developments

What challenges does a shift towards new payment processes imply for EU financial services policy?

Speakers: Rebecca Christie, Etienne Goosse, Chirag Patel, Jörn-Jakob Röber, Johannes Vermeire and Nicolas Véron Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 25, 2019
Read about event More on this topic

Past Event

Past Event

How comprehensive is the EU political realignment?

Has the left-right divide become obsolete in EU politics?

Speakers: David Amiel, Otilia Dhand, Nicolas Véron and Silke Wettach Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 25, 2019
Read about event More on this topic

Past Event

Past Event

China’s investment in Africa: consequences for Europe

How is Chinese investment impacting Africa, and what could be the consequences for Europe?

Speakers: Solange Chatelard, Maria Demertzis, Alicia García-Herrero, Abraham Liu and Estelle Youssouffa Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 24, 2019
Read about event More on this topic

Past Event

Past Event

Financial inclusion of SMEs for growth and job creation

How can increased access to finance benefit SMEs? What reforms are needed to encourage SME financial inclusion?

Speakers: Jihad Azour, Bruno Balvanera, Zsolt Darvas, Barbara Marchitto, Anta Ndoye and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 21, 2019
Read about event More on this topic

Past Event

Past Event

Sound at last? Assessing a decade of financial regulation

What has changed since the financial crisis of 2008 that makes the financial system sound at last? Is regulatory reform going in the right direction? Has it run its course? 

Speakers: Patrick Bolton, Rebecca Christie, Maria Demertzis, Mathias Dewatripont and Xavier Vives Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 20, 2019
Read about event More on this topic

Past Event

Past Event

What reforms for Europe's Monetary Union: a view from Spain

How is a successful European Monetary Union still possible in today's ever-shifting political landscape? What reforms need to occur in order to guarantee success of cohesive policies?

Speakers: Fernando Fernández, José Carlos García de Quevedo, Gabriele Giudice, Inês Goncalves Raposo, Javier Méndez Llera and Isabel Riaño Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 19, 2019
Read about event More on this topic

Past Event

Past Event

Role of national structural reforms in enhancing resilience in the Euro Area

At this event Gita Gopinath, Chief Economist at the IMF will discuss the role of national structural reforms in enhancing resilience in the Euro Area.

Speakers: Shekhar Aiyar, Maria Demertzis, Romain Duval, Gita Gopinath and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 17, 2019
Read about event More on this topic

Past Event

Past Event

Past, present, and future EU trade policy: a conversation with Commissioner Malmström

What was trade policy during the last European Commission? What will be the future of European trade under the next Commission?

Speakers: Cecilia Malmström, André Sapir and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 13, 2019
Read about event More on this topic

Past Event

Past Event

EU-LAC Economic Forum 2019: New perspectives in turbulent times

The third edition of the EU-LAC Economic Forum.

Speakers: Diego Acosta Arcarazo, Ignacio Corlazzoli, Maria Demertzis, Mauricio Escanero Figueroa, Alicia García-Herrero, Carmen González Enríquez, Bert Hoffmann, Edita Hrdá, Matthias Jorgensen, Juan Jung, Tobias Lenz, Carlos Malamud, J. Scott Marcus, Elena Pisonero, Belén Romana and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 11, 2019
Read about event More on this topic

Past Event

Past Event

The Ukrainian economy: the way forward after a year of political turbulence

What can Ukraine do to foster economic growth? How can the EU and other international partners help Ukraine with this process?

Speakers: Olena Carbou, Marek Dabrowski, Elena Flores, Ivan Miklos and Hlib Vyshlinsky Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 28, 2019
Read about event More on this topic

Past Event

Past Event

How do national energy policies fit into EU decarbonisation plans?

Through considering several different national perspectives, we discuss how to reconcile the EU Climate Strategy targets with national energy and climate policies.

Speakers: Aleksandra Gawlikowska-Fyk, Christian von Hirschhausen, Carole Mathieu and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 15, 2019
Load more posts