Education Information

Labour productivity, 2000-2019

Source: National accounts, ICP PPP estimations, multiple other sources in Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2015), "The Next Generation of the Penn World Table" American Economic Review, 105(10), 3150-3182, available for download atwww.ggdc.net/pwt

It goes without saying that weak investment and weak productivity growth are closely related. If enterprises do not invest systematically, the labour force cannot become more productive. Even more fundamentally, though, the most important source of productivity growth in an economy is manufacturing industry. For, manufacturing creates many opportunities for other economic activities to grow and expand and so improve the productivity of labour across the economy. 4 Weak productivity growth in Britain is the price the country is paying for the wrong policies of several decades that have favoured services, and especially the financial sector. From being the workshop of the world, we are now an importer of goods made by other countries and exporter of liquid money capital and trader on international money markets. As the country’s capacity to manufacture what it needs to meet the demands of its own people declined, so it was forced to import more. This is hardly the most environmentally friendly option, considering the distances that have to be covered across the world to transport imports. Just as important was the effect on the current account of the UK, which is mostly the comparison between the value of what we export and what we import. With the Thatcher government’s

Hence the reason for the pamphlet Rebuild Britain, Rebuild British Manufacturing: A strategy for Revival, 4 2022, available at https://rebuildbritain.org.uk/wp-content/uploads/2021/11/Rebuild-British Manufacturing.pdf.

16