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Productivity Growth in the Nordic Countries

An Appraisal of Analysis, Data and Methodological Information

image of Productivity Growth in the Nordic Countries

Even small increases in a country's growth rate can result in large changes in living standards over just one generation. This key insight, which often seems to be forgotten by policymakers, is an important reason why the field of economic growth continues to be a large research field. This report provides an overview of the development of labor productivity in the Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden) since the early 1980s. It also examines if data are consistent with predictions of traditional theories of growth. The analysis shows, for example, that the real wage per employee is positively related to the level of labor productivity - a finding suggesting that changes in relative standards of living have been driven by parallel changes in relative productivity.

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Country-Specifics

Although the Nordic countries are similar in many respects, such as, for example, the flat income distribution and the wide-ranging welfare system, there are also differences. While presenting the development of some sector shares over time, Table A.1 below illustrates some of this diversity. In particular, Iceland’s economy stands out in this sample of countries because it depends so heavily on the fishing industry. Norway is also a lot different because it is so highly dependent on its oil production (only Russia and Saudi Arabia export more oil than Norway).

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