Industrial Productivity Growth in Europe and in the U.S.

Abstract

One is constantly reminded in current literature that productivity in American industry is higher than in Europe, and practically every European government, the U.S. government, most industrialists and many trade unionists are actively studying means of improving the situation. The objective of this paper is not to establish the fact that there is a difference in absolute productivity levels and living standards between the two continents, but to estimate the degree to which the disparity between America and Europe has been increasing in the past fifteen years, and to make some tentative suggestions about the future. In the fifteen years between 1937-1952, output per man hour in American industry rose at the rate of 2 1 per cent. per annum. This rate of growth was higher than in the three European countries, Ireland, Sweden, and the U.K., where there was a positive rate of growth in this period. In the other European countries considered here, i.e., Austria, Belgium, France, Germany and the Netherlands, industrial productivity is still at pre-war levels because their normal rate of development was greatly upset by their experience during and immediately after the war. Apart from the experience of the past fifteen years, there is evidence that the rate of productivity growth in the U.S. was much higher than in the U.K. and probably than in other European countries over fairly long periods before the war. After an examination of some of the main factors determining American industrial productivity, it appears that the U.S. rate of growth is unlikely to diminish in the future, although it may depend less than in the past on natural advantages which European countries do not possess, and more upon factors which European countries have greater opportunities to emulate.