The Sources of Economic Growth in OECD Countries: A Review Article

1 In early 2003 the OECD published a major report entitled The Sources of Economic Growth in OECD Countries1 that summarized the main findings of the OECD growth project initiated in 1999. The objective of the project had been to explain the reasons for different growth experiences across OECD countries and to identify policies, institutions and other factors that could contribute to enhancing long-term growth prospects. This review article provides an overview of the report and comments on the key findings. The first broad conclusion is that there have been widening disparities across the OECD countries in rates of growth in GDP per capita in the 1990s. Some of this is due to the continued catchup of low-income countries in the sample,. But beyond this the disparities were the result of high growth rates in some already affluent countries such as the United States, Canada, Australia, the Netherlands and Norway, together with low growth rates in much of continental Europe.2 The OECD study also notes that disparities in growth have arisen largely from differences in labour utilization, with low growth countries experiencing slow growth or declines in employment and hours. Further, where there was weakness in labour utilization, this was not offset by faster productivity growth. The study finds that some fraction of overall growth was the result of “labour upskilling” (a shift to a more experienced or better educated workforce), but notes that in the slowgrowing countries this was partially due to the fact that the low-skilled were kept out of work.