We describe the theory and practice of real GDP comparisons across countries and over time. Version 8 of the Penn WorldFor over four decades, the Penn World Table (PWT) has been a standard source of data on real GDP across countries. Making use of prices collected across countries in benchmark years by the International Comparisons Program (ICP), and using these prices to construct purchasing-power-parity (PPP) exchange rates, PWT converts gross domestic product (GDP) at national prices to a common currency-US dollars-making them comparable across countries. Previous versions of PWT, each based on a newer ICP benchmark, were described extensively by their originators Heston 1988, 1991;Heston and Summers 1996). From version 8 onward, development has moved to the University of California, Davis and the University of Groningen, while retaining the PWT initials and with continued input from Alan Heston at the University of Pennsylvania.1 In this paper we describe the main changes to the measurement of real GDP that have been introduced in this "next generation" of PWT.1 PWT version 7 is based on the 2005 ICP prices. PWT version 8.1 is still based on the 2005 benchmark but has new features described in this paper, and is available online at: http://www.rug.nl/research/ggdc/data/pwt/.

This article provides guidance to prudent use of the World Input-Output Database (WIOD) in analyses of international trade. The WIOD contains annual time-series of world input-output tables and factor requirements covering the period from 1995 to 2011. Underlying concepts, construction methods and data sources are introduced, pointing out particular strengths and weaknesses. We illustrate its usefulness by analyzing the geographical and factorial distribution of value added in global automotive production and show increasing fragmentation, both within and across regions. Possible improvements and extensions to the data are discussed.

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In this paper, we “slice up the global value chain” using a decomposition technique that has recently become feasible due to the development of the World Input-Output Database. We trace the value added by all labor and capital that is directly and indirectly needed for the production of final manufacturing goods. The production systems of these goods are highly prone to international fragmentation as many stages can be undertaken in any country with little variation in quality. We seek to establish a series of facts concerning the global fragmentation of production that can serve as a starting point for future analysis. We describe four major trends. First, international fragmentation, as measured by the foreign value-added content of production, has rapidly increased since the early 1990s. Second, in most global value chains there is a strong shift towards value being added by capital and high-skilled labor, and away from less-skilled labor. Third, within global value chains, advanced nations increasingly specialize in activities carried out by high-skilled workers. Fourth, emerging economies surprisingly specialize in capital-intensive activities.

This article describes the contents and the construction of the EU KLEMS Growth and Productivity Accounts. This database contains industry-level measures of output, inputs and productivity for 25 European countries, Japan and the US for the period from 1970 onwards. The article considers the methodology employed in constructing the database and shows how it can be useful in comparing productivity trends. Although growth accounts are the organising principle, it is argued that the database is useful for a wider range of applications. We give some guidance to prudent use and indicate possible extensions. Copyright � The Author(s). Journal compilation � Royal Economic Society 2009.

Denser networks of intermediate input flows between countries suggest ongoing international fragmentation of production chains. But is this process mainly taking place between countries within a region, or is it truly global? We provide new macroeconomic evidence by extending the Feenstra and Hanson (1999) measure of fragmentation to a multicountry setting. We derive the distribution of value added by all countries involved in the production chain of a particular final good. This is based on a new input-output model of the world economy, covering 40 countries and 14 manufacturing product groups. We find that in almost all product chains, the share of value added outside the country-of-completion has increased since 1995. This is mainly added outside the region to which the country-of-completion belongs, suggesting a transition from regional production systems to "Factory World." This tendency was only briefly interrupted by the financial crisis in 2008.

Since the mid-1990s, labor productivity growth in Europe has significantly slowed compared to earlier decades. In contrast, labor productivity growth in the United States accelerated, so that a new productivity gap has opened up. This paper shows that this development is attributable to the slower emergence of the knowledge economy in Europe. We consider various explanations which are not mutually exclusive. These include lower growth contributions from investment in information and communication technology; the small share of information and communications technology-producing industries in Europe; and slower multifactor productivity growth, which proxies for advances in technology and innovation. Underlying these are issues related to the functioning of European labor markets and the high level of product market regulation in Europe. The paper emphasizes the key role of market service sectors in accounting for the productivity growth divergence between the two regions. We argue that improved productivity growth in Europe's market services will be needed to avoid a further widening of the productivity gap.

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