Economic growth and labour productivity in Europe: half a century of East-West comparisons

Bart van Ark
Additional contact information
Bart van Ark: Groningen University

No 00C01, Research Report from University of Groningen, Research Institute SOM (Systems, Organisations and Management)

Abstract: Abstract This paper discusses the comparative productivity performance of Eastern and Western Europe since 1950. Firstly, it looks at the productivity estimates since the beginning of transition in 1989. Despite a decline in output, the turmoil of the late 1980s affected labour participation more strongly, so that labour productivity growth has been less affected than per capita income growth. Presently, there are signs of a renewed slowdown in productivity growth in Central and Eastern European countries (CEEC’s), even though there is much diversity between the countries. Secondly an historical approach is adopted by taking into account the growth performance of CEEC’s for the period 1950-1989. The estimates suggest a long-term trend towards productivity slowdown in Eastern Europe beyond the slowdown in Western Europe since 1973. Indeed the growth path in the CEEC’s before transition can be characterised as extensive growth. Growth was based on rapid accumulation of resources without successful application of new technologies, which led to declining efficiency in the use of resources. It is argued that the present difficulties in closing the productivity and income gap between East and West are still partly due to the legacy of the past. Policies to improve work organisation, change production strategies, and strengthen quality of training are typically effective in the long run and will not materialise in immediate sustained gains in productivity. Thirdly the paper takes a look at the convergence and divergence trends in productivity since 1950. It outlines a continuous process of productivity divergence between Eastern and Western Europe, despite convergence within each of the two regions. It is argued that the brief episode of convergence since 1992 is primarily the result of the recovery of shock effects of the transition. A long term process of productivity convergence depends on the success by which the past process of extensive growth can be transformed into intensive growth, i.e., growth based on efficient resource use and successful adaptation of new technologies. This requires institution building to strengthen the effectiveness of product, labour and capital markets in the long run.

Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://irs.ub.rug.nl/ppn/240328132 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://irs.ub.rug.nl/ppn/240328132 [302 Found]--> https://irs.ub.rug.nl/ppn/240328132 [302 Found]--> https://www.rug.nl/research/portal/publications/pub(fb65e292-865d-47e9-843f-dec834e4292a).html [301 Moved Permanently]--> https://research.rug.nl/en/publications/pub(fb65e292-865d-47e9-843f-dec834e4292a).html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gro:rugsom:00c01

Access Statistics for this paper

More papers in Research Report from University of Groningen, Research Institute SOM (Systems, Organisations and Management) Contact information at EDIRC.
Bibliographic data for series maintained by Hanneke Tamling ().