FIGURE 11-1. Productivity Will Contribute More to GDP Growth through 2015 Than Will
Capital or Labor. Source: World Bank 2004f:44.
In all DCs, growth in national income per worker is attributed more to increases in
output per unit of input (the residual factor) than to increases in inputs, labor, capital,
and land. Denison indicates that sources for increased output per worker for the
United States or Northwestern Europe include advances in knowledge, economies of
scale, improved allocation of resources, reduction in the age of capital, and decreases
in the time lag in applying knowledge. Other empirical studies have included organizational
improvements, increased education and training, learning by experience,
and (linked to it) product variety (D. Addison 2003:4).
Western and Japanese total factor productivity growth slowed down after 1973.
Martin Neil Baily and Robert J. Gordon (1986:347–420) show that 10 percent of
the slowdown in annual productivity growth in the United States from 1948–73 to
1973–87 results from the understatement in productivity gains in the manufacture of