DCO-ZXE089-20040200-jgfPP1 Productivity & Prosperity William W. Lewis Competitiveness Congress Istanbul November 8, 2005.
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DCO-ZXE089-20040200-jgfPP1
Productivity & Prosperity
William W. Lewis
Competitiveness CongressIstanbul
November 8, 2005
DCO-ZXE089-20040200-jgfPP1
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WORLD DISTRIBUTION OF PER CAPITA GDP BY COUNTRYU.S. Dollars, at PPP High income countries
Middle income countries
Low income countries
0
5
10
15
20
25
30
35
40
0 1000 2000 3000 4000 5000 6000
ChinaIndia
Mexico
Brazil
IndonesiaPakistanBangladesh
Russia
Nigeria
Vietnam
South AfricaPoland
Spain
Korea
GDP per capita, 2002U.S. 2002 $ thousands
PopulationMillions
Norway
Germany
France
U.K.Japan
Canada
Italy
U.S.
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• Capital and technology • Scale and capacity
utilization
• Skill level of personnel • Organization of functions
and tasks, marketing and other operational factors
GDP per capita
Employment Labor productivity
Capitax=
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CONCLUSIONS
• Sector level analysis is necessary to find causal factors of economic performance
• Education is not as immediately important as most people think
• Distortions in competition in product markets are more important than labor or capital market problems
• Today’s big governments in poor countries are a handicap today’s rich countries did not have when they were poor
• Consumers are the only political force that can stand up to producer interests, big government, and the technocratic, political, business, and intellectual elites
DCO-ZXE089-20040200-jgfPP1
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CONCLUSIONS
• Sector level analysis is necessary to find causal factors of economic performance
• Education is not as immediately important as most people think
• Distortions in competition in product markets are more important than labor or capital market problems
• Today’s big governments in poor countries are a handicap today’s rich countries did not have when they were poor
• Consumers are the only political force that can stand up to producer interests, big government, and the technocratic, political, business, and intellectual elites
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DUAL ECONOMY IN JAPAN
Relative productivity levelsIndex U.S. = 100
Employment100% = 12.473 million employees
0
20
40
60
80
100
120
140
160
0 20 40 60 80 100
Steel
Automotive parts
Metal workingCars
Consumer electronics
Retail Housing construction
Food processing
U.S. = 100
Beer
Soap and detergent
Computers
10 30 50 70 90
11 Industries
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CONCLUSIONS
• Sector level analysis is necessary to find causal factors of economic performance
• Education is not as immediately important as most people think
• Distortions in competition in product markets are more important than labor or capital market problems
• Today’s big governments in poor countries are a handicap today’s rich countries did not have when they were poor
• Consumers are the only political force that can stand up to producer interests, big government, and the technocratic, political, business, and intellectual elites
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Organization of laborLabor productivityM2/thousand hours
Construction costU.S.$/M2
U.S.(Houston)
Brazil(São Paulo)
U.S. Brazil
Subcontractors
Blue collar background
40
Mexican agriculture
10
Brazilian northeast agriculture
• Less specialized
• Similar educational background
U.S. Brazil Brazilian gap
BLUE COLLAR TRAINABILITY – CONSTRUCTION OF SUBSIDIZED HOUSING
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CONCLUSIONS
• Sector level analysis is necessary to find causal factors of economic performance
• Education is not as immediately important as most people think
• Distortions in competition in product markets are more important than labor or capital market problems
• Today’s big governments in poor countries are a handicap today’s rich countries did not have when they were poor
• Consumers are the only political force that can stand up to producer interests, big government, and the technocratic, political, business, and intellectual elites
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LABOR PRODUCTIVITY, OUTPUT, AND EMPLOYMENT IN U.S. COMMERCIAL BANKSIndexed to 1980 = 100
60
70
80
90
100
110
120
130
140
150
Output
1970 72 74 76 78 80 82 84 86 90 1992
Employment
Productivity
Deregulation
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CONCLUSIONS
• Sector level analysis is necessary to find causal factors of economic performance
• Education is not as immediately important as most people think
• Distortions in competition in product markets are more important than labor or capital market problems
• Today’s big governments in poor countries are a handicap today’s rich countries did not have when they were poor
• Consumers are the only political force that can stand up to producer interests, big government, and the technocratic, political, business, and intellectual elites
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GOVERNMENT SPENDING VS. GDP PER CAPITA
India (2000)
Brazil (2000)
Japan (1950)
France (1913)
U.S. (1913)
0
5
10
15
20
25
30
35
40
0 5,000 10,000 15,000 20,000 25,000 30,000
GDP per capita1990 U.S.$
Government spending As percent of GDP
Russia (1998)
U.S. (2000)
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Percent urban employmentINFORMALITY IN BRAZIL
0
10
20
30
40
50
60
70
1988 1990 1992 1994 1996 1998 2000
Informal
Formal
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CONCLUSIONS
• Sector level analysis is necessary to find causal factors of economic performance
• Education is not as immediately important as most people think
• If poor countries take care of their productivity problems, they will get the needed capital
• Distortions in competition in product markets are more important than labor or capital market problems
• Today’s big governments in poor countries are a handicap today’s rich countries did not have when they were poor
• Consumers are the only political force that can stand up to producer interests, big government, and the technocratic, political, business, and intellectual elites
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5. Consumers have political clout US Consumer advocacy
1914, Walter Lippman“We hear a great deal about the class-consciousness of labour. My own observation is that in America today consumers’ consciousness is growing very much faster.”
1906, Senator Robert La Follette“The welfare of all the people as consumers should be the supreme consideration of the government.”
1932, President Franklin Roosevelt“I believe that we are at the threshold of a fundamental change in our popular economic thought; in the future, we’re going to think less about the producer and more about the consumer.”
1960, John F. Kennedy“The consumer is the only man in our economy without a high-powered lobbyist. I intend to be that lobbyist.”
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