SOME COUNTRIES PRODUCE SO MUCH MORE OUTPUT PER WORKER THAN OTHERS: Productivity Calculations by Country

Figure 1 shows productivity levels across countries plotted against output per worker. The figure illustrates that differences in productivity are very similar to differences in output per worker; the correlation between the two series (in logs) is 0.89. Apart from Puerto Rico, the countries with the highest levels of productivity are Italy, France, Hong Kong, Spain, and Luxembourg. Those with the lowest levels are Zambia, Comoros, Burkina Faso, Malawi, and China. U.S. productivity ranks 13th out of 127 countries.

w6564-4
Table 1 decomposes output per worker in each country into the three multiplicative terms in equation (3): the contribution from physical capital intensity, the contribution from human capital per worker, and the contribution from productivity. It is important to note that this productivity level is calculated as a residual, just as in the growth accounting literature.

To make the comparisons easier, all terms are expressed as ratios to U.S. values.9 For example, according to this table, output per worker in Canada

Country United States Y/L ( 1.000 -Conti

K/Y )a/(1-a

1.000

•ibution froi > H/L

1.000

m

A

1.000

Canada 0.941 1.002 0.908 1.034
Italy 0.834 1.063 0.650 1.207
West Germany 0.818 1.118 0.802 0.912
France 0.818 1.091 0.666 1.126
United Kingdom 0.727 0.891 0.808 1.011
Hong Kong 0.608 0.741 0.735 1.115
Singapore 0.606 1.031 0.545 1.078
Japan 0.587 1.119 0.797 0.658
Mexico 0.433 0.868 0.538 0.926
Argentina 0.418 0.953 0.676 0.648
U.S.S.R. 0.417 1.231 0.724 0.468
India 0.086 0.709 0.454 0.267
China 0.060 0.891 0.632 0.106
Kenya 0.056 0.747 0.457 0.165
Zaire 0.033 0.499 0.408 0.160
Average, 127 Countries: 0.296 0.853 0.565 0.516
Standard Deviation: 0.268 0.234 0.168 0.325
Correlation w/ Y/L (logs) 1.000 0.624 0.798 0.889
Correlation w/ A (logs) 0.889 0.248 0.522 1.000

is about 94 percent of that in the United States. Canada has about the same capital intensity as the United States, but only 91 percent of U.S. human capital per worker. Differences in inputs explain lower Canadian output per worker, so Canadian productivity is about the same as U.S. productivity. Other OECD economies such as the United Kingdom also have productivity levels close to U.S. productivity. Italy and France are slightly higher; Germany is slightly lower.
Consistent with conventional wisdom, the U.S.S.R. has extremely high capital intensity and relatively high human capital but a rather low productivity level. For the developing countries in the table, differences in productivity are the most important factor in explaining differences in output per worker. For example, Chinese output per worker is about 6 percent of that in the United States, and the bulk of this difference is due to lower productivity: without the difference in productivity, Chinese output per worker would be more than 50 percent of U.S. output per worker./span