The Productivity of Nations

This chapter scrutinizes research on the productivity of nations, with a particular focus on the preceding 50 years. First, it briefly synopsizes “classic” studies on economic growth and convergence of nations. The main criticism of these studies is that they did not account for potential inefficiency of countries. The production frontier literature attempts to deal with this issue, and the chapter gives a brief introduction to it with a focus on data envelopment analysis. One central point of this review is the analysis of sources of productivity growth before and after 1990, a period of time that appears to be a point of structural change in growth patterns around the world. The second thread of this chapter concerns the forces behind the transformation of the worldwide productivity distribution from a unimodal to a bimodal distribution during the 1990s. Finally, it emphasizes caveats and outlines possible directions for future research.