OECD urges emerging economies to boost productivity

2 Jul 14
Productivity in developing and emerging countries is still very weak compared to advanced economies and the gap is widening, according to the Organisation for Economic Co-operation Development.

By Judith Ugwumadu | 2 July 2014

Productivity in developing and emerging countries is still very weak compared to advanced economies and the gap is widening, according to the Organisation for Economic Co-operation Development.

The think-tank warned in its Perspectives on global development 2014 that it would take decades for developing and emerging countries to catch up with advanced economies unless efforts were made to boost productivity.

Its report showed that upper-middle income economies like China, Kazakhstan and Panama were on track to reach average OECD income levels by 2050 if they are able sustain their growth performance.

But other middle-income countries, including Brazil, Colombia, Hungary, Mexico and South Africa, would take much longer at current growth rates.

Labour productivity in most developing and emerging countries was well below half the level of OECD countries.

According to current figures, the average OECD level of gross domestic product per person employed in 2011 was $86,000. But for developing and emerging countries the figure stood at $21,600.

OECD secretary general Angel Gurría said developing and emerging countries needed to make greater efforts to diversify their economic structure towards higher value activities in agriculture, manufacturing and services.

‘To do this they have to increase the levels of educational attainment and skills of their labour force and improve their capability to innovate – to produce goods and services that are new to the economy,’ he said.

‘They can do the latter by importing new ways of producing and distributing goods and services, as well as by developing their own which can better suit their specific conditions or give them a competitive edge in the international market.’

The report also suggested that the service sector could be a key driver of value-added growth in emerging countries.

For instance, developing high-end services for a growing middle class and value-added services for both domestic and foreign business, such as consulting, engineering services or medical analysis, would create jobs with higher returns per worker, the OECD said.

 

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