Multi-factor productivity indicators at the country level: not the meaning it is assumed they have

Joaquim Vergés-Jaime

International Review of Applied Economics, 2026, vol. 40, issue 1, 1-17

Abstract: In addition to the usual productivity indexes at the country (or sector) level built upon the standard Labour Productivity ratio, public statistical bodies also pay attention to multi-factor productivity indexes (MFP) based on the academic Total Factor Productivity approach. Those refer to the idea of a productivity measure that considers not just one production factor, Labour, but all of them. However, most of the information on MFP released by statistical agencies refers in fact to a very simplified two-input approach: Labour and Capital. Only in some cases may we find data from measuring models that also encompass other factors; normally Energy, Materials, and Services: the so-called KLEMS measures. These MFP models and the corresponding data regularly released by public agencies are analysed here. And the conclusion is argued that such indexes or rates of change, whether those based on Labour & Capital alone or KLEMS models, are not in practice measuring a concept of joint productivity as such but rather that of a certain proxy for the rate of growth (change) of economic activity in the country (or sector/‘industry’). These indexes would thus be more alternative measures of economic growth/decline than an independent variable codetermining it. All of which have relevant implications for the assessment of economic policies.

Date: 2026
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DOI: 10.1080/02692171.2024.2404885

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