Amidst the challenges of slowing productivity growth, several OECD countries have established pro-productivity institutions to generate impartial evidence and data on productivity trends and growth drivers, as well as inform pro-productivity policies and interventions. This paper introduces a novel analytical framework to examine the fundamental characteristics of such pro-productivity institutions. The framework builds on a comprehensive review of pro-productivity institutions and applied policy guidance initiatives aimed at supporting capabilities and mutual learning across these institutions. The paper identifies that pro-productivity institutions adopt a range of structures and methods to contribute to pro-productivity policies. Despite this diversity, the paper identifies certain insights that can assist pro-productivity institutions in continually enhancing their capabilities. Specifically, the paper underscores the significance of ensuring the analytical independence of pro-productivity institutions and providing access to micro-level data on firms and workers to inform policies and interventions with objective data and evidence. This paper initiates a new research direction on the political economy of productivity policies that could help countries execute effective policies to raise incomes and living standards.
In the context of the global economic landscape, productivity growth is a crucial driver of long-term economic progress and improved living standards. However, the productivity growth rate has slowed down in many advanced economies since the global financial crisis, leading policymakers to search for effective ways to boost productivity. To this end, several OECD countries have established pro-productivity institutions, which aim to produce impartial evidence and data on productivity trends and growth drivers to inform the development and implementation of pro-productivity policies and interventions.
The paper proposes a new analytical framework to examine the fundamental characteristics of pro-productivity institutions. The framework draws on a comprehensive review of existing pro-productivity institutions and applied policy advice work aimed at supporting capabilities and mutual learning across these institutions. This framework identifies key dimensions of pro-productivity institutions, such as their institutional structures, governance arrangements, analytical methods, and policy outreach strategies.
The paper finds that pro-productivity institutions rely on a variety of set-ups and approaches to contribute to pro-productivity policies. Some pro-productivity institutions have a specific focus on particular productivity growth drivers, such as innovation, skills, or competition, while others take a more holistic view of productivity growth. Pro-productivity institutions also differ in their institutional structures, such as whether they are standalone institutions or embedded within existing organizations, as well as their governance arrangements, such as the extent of their independence from political influence. Moreover, pro-productivity institutions employ a range of analytical methods, such as micro-level data analysis, econometric modelling, and sectoral and firm-level studies, to generate evidence on productivity trends and growth drivers.
Despite the variety in approaches, the paper identifies several lessons that can help pro-productivity institutions continuously enhance their capabilities. First, the paper emphasizes the importance of ensuring the analytical independence of pro-productivity institutions, such as by appointing independent experts to their governing bodies and avoiding political interference in their analytical work. Second, the paper highlights the need for pro-productivity institutions to have access to micro-level data on firms and workers to inform policies and interventions with objective data and evidence. Third, the paper suggests that pro-productivity institutions can benefit from closer collaboration and knowledge sharing across institutions and countries, particularly in areas such as methodology development and best practices.
This paper opens a new line of research on the political economy of productivity policies. The paper identifies the political economy challenges faced by pro-productivity institutions, such as the potential tension between their analytical independence and political accountability, as well as the challenges of securing the necessary resources and attracting the necessary expertise. Understanding these challenges and identifying strategies to overcome them can help countries execute effective productivity policies and boost long-term economic progress and living standards.