What are the sources of productivity growth? Economic theory offers a panoply of explanations, considering the effects on productivity of organisational factors, research and development activity and factor accumulation, amongst other influences. Translating these theoretical models into workable empirical vehicles is the focus of a large literature. This paper evaluates the empirical literature on productivity performance using the productivity framework conceived by HM Treasury, emphasising Five Drivers - physical capital skills, innovation, competition and enterprise. The paper emphasises the two factors are frequently overlooked: first, the effect of international openness on productivity catch-up, and secondly, the policy importance of divergences between private and social rates of return. Further, whilst evidence relating to the first four drivers is relatively abundant, evidence on the effect of enterprise is scarce.
Productivity, Growth, Technological Change, Five Drivers
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