The Misinterpretation of Productivity Measures

Abstract

Abstract The author argues that Sufficient attention has not been paid by economists and statisticians to the fact that, given the way productivity indicators at sector and country-level are defined and determined by statistical agencies, the resulting figures—for comparisons among countries, or among sectors within a country, as well as for comparisons over time (“productivity growth”)—do not actually have the assumed meaning: that is, an increase of the index indicates that the country’s (sector’s) companies have become more productive, in the sense of producing more products or services with the same quantities of resources, or producing the same with fewer quantities of resources, etc.