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: Digital economy and innovation

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

[email protected]

Read about event More on this topic
 

Past Event

Past Event

How to deal with small banks: consolidation, tailoring and the fintech challenge

Small banks face multiple challenges. What structural changes are needed to tackle these pressures?

Speakers: Alexander Lehmann, Nicolas Véron, Xavier Vives, Anne Fröhling and Philip Evans Topic: Banking and capital markets Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: December 9, 2021
Read about event More on this topic
 

Past Event

Past Event

Inside the European crises: a conversation with Marco Buti

At this event Marco Buti talks to Maria Demertzis, André Sapir and Guntram Wolff about his new book, in which he gives an insiders look at European policy making.

Speakers: Marco Buti, Maria Demertzis, André Sapir and Guntram B. Wolff Topic: European governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: December 3, 2021
Read about event More on this topic
 

Past Event

Past Event

Role of innovation in decarbonisation

A fireside conversation with Eni CEO Claudio Descalzi on decarbonisation.

Speakers: Claudio Descalzi and Guntram B. Wolff Topic: Green economy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 29, 2021
Read about event More on this topic
 

Past Event

Past Event

Fiscal policy and rules after the pandemic

What are the possibilities for shaping the new fiscal policy?

Speakers: Zsolt Darvas, Maria Demertzis, Michel Heijdra and Katja Lautar Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 24, 2021
Read about event More on this topic
 

Past Event

Past Event

Covid recovery and the green transition: What can promotional banks do?

What is the role of promotional banks in financing the green transition?

Speakers: Sophie Barbier, Maria Demertzis, Ricardo Mourinho and Lucinio Muñoz Topic: Green economy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 18, 2021
Read about event
 

Past Event

Past Event

How can we create more sustainable value chains?

There is an urgent need for GVCs to become more resilient and inclusive, and meet the net-zero challenge.

Speakers: Erik Berglöf and Alicia García-Herrero Topic: Global economy and trade, Green economy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 10, 2021
Read about event More on this topic
 

Past Event

Past Event

Phasing out COVID-19 emergency support programmes: effects on productivity and financial stability

How can European countries phase out the COVID-19 support measures without having a negative impact on productivity and financial stability?

Speakers: Eric Bartelsman, Maria Demertzis, Peter Grasmann and Laurie Mayers Topic: Macroeconomic policy Date: November 9, 2021
Read about event More on this topic
 

Past Event

Past Event

European monetary policy: lessons from the past two decades

This event will feature the presentation of “Monetary Policy in Times of Crisis – A Tale of Two Decades of the European Central Bank."

Speakers: Petra Geraats, Wolfgang Lemke, Francesco Papadia and Massimo Rostagno Topic: Macroeconomic policy Date: November 4, 2021
Read about event
 

Past Event

Past Event

Microchips and Europe's strategic autonomy

Per microchips ad strategic autonomy.

Speakers: Piotr Arak, Alicia García-Herrero, Jay Lewis, Stefan Mengel and Niclas Poitiers Topic: Digital economy and innovation, European governance Date: November 2, 2021
Read about event More on this topic
 

Past Event

Past Event

Can climate change be tackled without ditching economic growth?

What will be necessary to achieve climate goals and keep growing?

Speakers: Francesco Starace, Simone Tagliapietra and Guntram B. Wolff Topic: Green economy Date: October 28, 2021
Read about event
 

Past Event

Past Event

Monetary policy in the time of climate change

How does climate change influence monetary policy in the eurozone? What potential monetary policy measures should be taken up to address climate risks?

Speakers: Cornelia Holthausen, Jean Pisani-Ferry and Guntram B. Wolff Topic: Green economy, Macroeconomic policy Date: October 20, 2021
Read about event
 

Past Event

Past Event

A hybrid future of work

Addressing employers’ and employees’ challenges.

Speakers: Julie Brophy, Joost Korte, Laura Nurski, Renske Paans and Alex A. Saliba Topic: Digital economy and innovation, Inclusive growth Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 19, 2021
Load more posts