Businesses in the European Union lag U.S. businesses not just in the amount they invest in R&D, but also in their capabilities to transform these investments into productivity gains, writes John Wu in Innovation Files.

Fact of the Week: U.S. High-Tech Firms Gain Two-And-A-Half Times More Productivity Than European High-Tech Firms From The Same Level Of R&D Investment

A new report by ITIF finds that the fact that U.S. workers are 16 percent more productive than EU-15 workers is largely attributable to Europe’s failure to invest in information and communications technologies (ICT), which drives labor productivity.

Fact of the Week: Labor Productivity in the U.S. is Higher than in the EU, Largely Due to ICT Investments

A recent study found that the relationship between concentration and productivity was negative in only three of 15 countries.

Fact of the Week: Productivity and Market Concentration Are Positively Associated in Most of the Core Economies in Europe

Labor productivity growth has slowed dramatically across the developed world in recent years. In the United States, it dropped to just 0.96 percent in the 10-year period from 2007 to 2017. That was down by more than half from 2.06 percent in the previous 10-year period.

Fact of the Week: The Digital Economy has Contributed to 86 Percent of U.S. Labor Productivity Growth in Recent Years Despite Accounting for Only 8.2 Percent of GDP

ICT-intensive firms in Europe suffered no productivity slowdown during the Great Recession while their counterparts that invested less in ICT did, writes John Wu in Innovation Files.

Fact of the Week: ICT-Intensive Firms in Europe Suffered No Productivity Slowdown During the Great Recession While Their Counterparts That Invested Less in ICT Saw Decreases up to 9.5 Percent

In the United States, micro, small, and medium-sized enterprises are just 47 percent as productive as large firms, compared to 60 percent in other advanced economies.

Fact of the Week: US Small Businesses Are 47 Percent as Productive as Big Businesses

After falling from its peak of 5.7 percent in 2006 to 3.6 percent in 2019, the United States’ manufacturing trade deficit as a share of its GDP has risen to 5.3 percent in 2022 through June, its highest level since 2008 (5.5 percent).

Fact of the Week: The US Manufacturing Trade Deficit as a Share of GDP Through June Is at Its Highest Level Since 2008

Prior to last week’s progress toward an interim trade deal with China, the United States had repeatedly delayed the expansion of tariffs on Chinese goods to most finished products. This was out of concern that such an escalation would hit U.S. consumers harder than existing tariffs on the intermediate goods that serve as inputs for companies to make their final products.

Fact of the Week: A 10 Percent Reduction in Tariffs on Intermediate Goods Increases Productivity Growth by 1.9 Percent, an Impact 6.5 Times Greater Than the Same Reduction on Final Goods

While U.S. labor is currently more productive than Canadian labor, it is losing ground both in terms of pure productivity and price competitiveness.

Fact of the Week: 72 Percent of the Per Capita GDP Gap Between the US and the EU Is Explained by Lower Productivity

Related

Fact of the Week: U.S. High-Tech Firms Gain Two-And-A-Half Times More Productivity Than European High-Tech Firms From The Same Level Of R&D Investment

Fact of the Week: Labor Productivity in the U.S. is Higher than in the EU, Largely Due to ICT Investments

Fact of the Week: Productivity and Market Concentration Are Positively Associated in Most of the Core Economies in Europe