Tracing Productivity Growth Channels in the UK

Daniel Garcia-Macia and Julia Korosteleva

No 2021/273, IMF Working Papers from International Monetary Fund

Abstract: What drove the UK productivity slowdown post-GFC, and how is the post-Covid recovery expected to differ? This paper traces the sources of TFP growth in the UK over the last two decades through the lens of a structural model of innovation, using registry data on the universe of firms. The dominant innovation source in the pre-GFC decade were improvements by incumbent firms on their own products, whereas creation of new varieties by entrants took a leading role post-GFC. In the Covid recovery, survey data suggests that creative destruction (i.e., innovation replacing other firms’ products) is expected to gain importance. This emphasizes the need for growth policies that facilitate labor and capital reallocation across firms, in addition to R&D support.

Keywords: economic growth; innovation; creative destruction; UK productivity slowdown post-GFC; UK market economy; GFC decade; innovation source; leading role; sources of TFP growth; exit rate; Employment; Total factor productivity; Job creation; Productivity; Job destruction; Global (search for similar items in EconPapers)
Pages: 32
Date: 2021-11-12
New Economics Papers: this item is included in nep-eff, nep-ent, nep-sbm and nep-tid
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Journal Article: Tracing productivity growth channels in the UK (2025)
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