U.S. and Foreign Productivity and Competitiveness

Although the level of productivity is very high in the United States, productivity growth has slowed sharply in recent years. Moreover, growth of productivity is significantly slower in the United States than in the other major industrialized nations. For example, annual real growth in gross national product per employed worker in the United States slowed from 1.9 percent in 1963-73 to only 0.1 percent in 1973-79. In the latter period, Japan’s productivity growth was 3.4 percent per year, West Germany’s, 3.2 percent and France’s, 2.7 percent.” This Economic Commentary compares U.S. and foreign productivity growth rates, explores the relationship between productivity growth and changes in international price competitiveness, and examines the impact on the U.S. share of world manufactured good exports.