Productivity Levels in British and German Manufacturing Industry

Abstract

Relative levels of labour productivity are estimated to have been about 22 per cent higher in German than in British manufacturing in 1987. The German productivity advantage was most pronounced in non-electrical engineering, vehicles and metals. The British performance was relatively better in food, drink and tobacco and textiles and productivity levels appear to be about equal in the two countries in chemicals and electrical engineering. About 80 per cent of the productivity gap in aggregate manufacturing can be accounted for by differences in the levels of both physical and human capital. The aggregate productivity ratio of 22 per cent is lower than that found for 1968. The time pattern of relative productivity in the intervening two decades shows a considerable increase in the 1970s followed by a rapid narrowing of the productivity gap in the 1980s.