Links between weak investment and the slowdown in productivity and potential output growth across the OECD

Boosting productivity in Switzerland

“…This means that technological progress is modest and that investment has been too weak to compensate for the rise in labour input. This is consistent with findings for other OECD countries (Ollivaud et al, 2016). Further improving the business environment would boost investment and generate both an increase in the capital-labour ratio and a rebound in MFP.…”

Labour market resilience

“…The absence of an increase in the rate of structural unemployment or a decline in the rate of labour force participation in the OECD area indicates that the slowdown in potential output growth is largely unrelated to labour market developments. This is consistent with evidence suggesting that the slowdown in potential output growth reflects declines in capital deepening and a slowdown in multi-factor productivity growth (Ollivaud et al, 2016). While the decline in capital deepening largely reflects increased financial frictions and persistent shortfalls in aggregate demand related to the economic downturn, the slowdown in multi-factor productivity growth began before the Great Recession and is therefore at best only partly related to the economic downturn (Andrews et al, 2016).…”

Investment as a transmission mechanism from weak demand to weak supply and post-crisis productivity slowdown

“…They would like to thank Oliver Denk, Professor Don Heon Kim, Catherine L. Mann, Jean-Luc Schneider, Peter Hoeller, Balàzs Égert, Nadim Ahmad and Asa Johansson for comments on an earlier version of the paper, as well as Sylvie Toly and Alexandre Kopoin for statistical support and Veronica Humi for technical assistance. This paper represents an extension of work previously reported in Ollivaud (2016).…”