Hostname: page-component-5c6d5d7d68-vt8vv Total loading time: 0.001 Render date: 2024-08-16T13:34:54.679Z Has data issue: false hasContentIssue false
  • English
  • Français

Capital Stocks and Productivity in Industrial Nations

Published online by Cambridge University Press:  26 March 2020

Mary O'Mahony
Mary O'Mahony*
Affiliation:
Leverhulme Trust
Get access Rights & Permissions [Opens in a new window]

Abstract

This article presents estimates of the contribution of physical capital to explaining labour productivity differences between Britain and four of her major competitors, the United States, Germany, France and Japan. The paper uses a standardised method to estimate capital stocks in the five countries. It presents arguments why this may be preferable to comparing official capital stock figures since the latter are sensitive to differences in measurement techniques used by the statistical offices. In the aggregate economy differences in physical capital are important in explaining labour productivity levels in Britain relative to the United States, Germany and France but cannot explain Britain's labour productivity advantage over Japan. In manufacturing Britain's lower capital per unit of labour also helps explain her lower labour productivity levels relative to all four countries but the contribution of capital is generally lower in manufacturing than for the aggregate economy. For both the aggregate economy and manufacturing differences in capital growth rates help explain Britain's productivity growth performance in the past three decades relative to the United States and Japan but have little explanatory power relative to Germany and France.

Type
Articles
Information
National Institute Economic Review , Volume 145 , August 1993 , pp. 108 - 117
Copyright
Copyright © 1993 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

∗

This research was funded by a grant from the Leverhulme Trust to which I owe thanks. I am particularly grateful to Angus Maddison who initially encouraged me to work on the issue of international measures of physical capital stocks and for comments received. Helpful comments were also received from two anonymous referees, Bart van Ark, Andrew Britton, Steve Broadberry, David Mayes, Nick Oulton and Dirk Pilat.

References

Bacon, R.W. and Eltis, W.A. (1974), The Age of US and UK Machinery, NEDO, London.Google Scholar
Barro, R. and Sala-i-Martin, X. (1991), ‘Convergence across regions and states’, Brookings Papers on Economic Activity, No. 1.CrossRefGoogle Scholar
Baumol, W.J. (1986), ‘Productivity growth, convergence and welfare: what the long-run data show’, American Economic Review, vol. 76, December.Google Scholar
Blades, D.W. (1983), ‘Service lives of fixed assets’, OECD working paper No. 4, March.Google Scholar
Blades, D.W. (1991), ‘Capital measurement in the OECD countries: an overview’ in Technology and Productivity: the Challenge for Economic Policy, OECD, Paris.Google Scholar
Blades, D.W. and Roberts, D. (1987), ‘A note on the new OECD benchmark purchasing power parities for 1985’, OECD Economic Studies, No.9, Autumn.Google Scholar
Broadberry, S. (1992a), ‘Manufacturing and the convergence hypothesis: what the long run data show’, CEPR discussion paper No.708, July.Google Scholar
Carrê, J.J., Dubois, P. and Malinvaud, E. (1976), French Economic Growth Stanford University Press, Stanford, California.Google Scholar
Kirner, W. (1968), ‘Zeitreihen für das Anlagevermögen der Wirtschaftsbereiche in der Bundesrepublik Deutschland’, Deutsches Institut für Wirtschaftsforschung—Beiträge zur Strukturforschung, Heft 5, Duncker & Humblot, Berlin.Google Scholar
Maddison, A. (1990), The Dynamics of Capitalist Development, Oxford University Press.Google Scholar
Maddison, A. (1992), ‘Standardised estimates of fixed capital and capital stock at constant prices: A long run survey for 6 countries’, paper presented at the 22nd general conferences of the International Association of the Review of Income and Wealth, 30 August-5 September, Flims.Google Scholar
Mankiw, N.G., Romer, P. and Weil, D. (1992), ‘A contribution to the empirics of economic growth’, Quarterly Journal of Economics, May, P. 407–438.Google Scholar
OECD (1985), Purchasing power parities and real expenditures, 1985, Department of Economics and Statistics, OECD, Paris. OECD (1991), Taxing profits in a global economy: domestic and international issues, OECD, Paris.Google Scholar
Ohkawa, K. and Rosovsky, H. (1973), Japanese Economic Growth, Oxford University Press.Google Scholar
Ohkawa, K. and Shinohara, M. (1979), Patterns of Japanese economic development—a quantitative appraisal, Yale University Press.Google Scholar
O'Mahony, M. (1992a), ‘Productivity levels in British and German manufacturing’, National Institute Economic Review, February.CrossRefGoogle Scholar
O'Mahony, M. (1992b), ‘Productivity and human capital formation in UK and German manufacturing’, National Institute of Economic and Social Research, Discussion Paper No. 28, October.Google Scholar
O'Mahony, M. (1993), ‘International measures of fixed capital: a five country study’, Mimeo, National Institute of Economic and Social Research, London.Google Scholar
Oulton, N. (1992), ‘Investment, increasing returns and the pattern of productivity growth in UK manufacturing, 1954-86’, NIESR discussion paper, No. 5, February.Google Scholar
Pilat, D. (1992), ‘Productivity growth and levels by sector, Japan and the United States, 1885-1990.’, mimeo, University of Groningen.Google Scholar
Pilat, D. and Van Ark, B. (1992), ‘Productivity leadership in manufacturing, Germany, Japan and the United States, 1973-1989’, Research memorandum No. 456, University of Groningen, March.Google Scholar
Prais, S. (1986), ‘Some international comparisons of the age of the machine stock’, The Journal of Industrial Economics, March, p. 261–277.Google Scholar
Romer, P. (1986), ‘Increasing returns and long run growth’, Journal of Political Economy, vol. 94, p.p. 1002-37.CrossRefGoogle Scholar
Romer, P. (1990a), ‘Endogenous technological change’, Journal of Political Economy, October, S71–S102.CrossRefGoogle Scholar
Romer, P. (1990b), ‘Capital, labour and productivity’, Brookings Papers, Microeconomics.CrossRefGoogle Scholar
Summers, R. and Heston, A. (1991), ‘The Penn world table (mark 5): an expanded set of international comparisons, 1950-1988’, The Quarterly Journal of Economics, May, p.p. 327–368.Google Scholar
Uno, Uimio. (1987), Japanese Industrial Performance, North Holland, Amsterdam.Google Scholar
Van Ark, B. (1990a), ‘Comparative levels of labour productivity in Dutch and British manufacturing’, National Institute Economic Review, February, London.CrossRefGoogle Scholar
Van Ark, B. (1990), ‘Manufacturing productivity levels in France and the United Kingdom’, National Institute Economic Review, August, London.CrossRefGoogle Scholar