Economic growth is a key factor in the improvement of our living standards and hence of great interest to academics and policy makers alike. This book aims to explain why growth across Europe has been disappointing since the mid 1990s, both compared to earlier periods and compared to the United States, which showed resurgent growth after 1995. In the process we present the EU KLEMS database, a rich data toolbox that can be used to explore these and other growth-related questions. The main message of this book is that an industry perspective on growth and the sources of growth is essential because of the great diversity in the drivers of growth in agriculture, manufacturing and services industries, including trade, transport, financial, business and personal services.

The empirical study of sources of economic growth has a long tradition in Europe, starting as far back as the seventeenth century when William Petty began to construct measures of economic performance including comparisons of output and productivity in industry, trade and transportation. Over the centuries, with the emergence of standardised national accounts and other internationally comparable statistical sources, the measurement of sources of growth has become more sophisticated. During the second half of the last century, growth accounting evolved as a standard methodology. In 1987, Jorgenson, Gollop and Fraumeni published a pioneering study laying out what has become known as the KLEMS approach.