The Industry Sources of Productivity Growth and Convergence

Industry-level productivity analysis can be a useful diagnostic tool to better understand why some countries show faster overall productivity growth and to direct research attention to parts of the economy that warrant more detailed scrutiny. This chapter illustrates these strengths in three applications, namely the Europe-US productivity growth gap since the mid-1990s, the sectoral sources of rapid convergence of productivity levels between advanced and emerging economies, and an analysis of the determinants of productivity growth and convergence. One conclusion is that a better understanding of productivity growth (or lack thereof) in services industries should still be an important goal of researchers aiming to understand cross-country growth differences.