Economic growth and productivity:
Italy and the role of knowledge
Ignazio Visco
Governor of the Bank of Italy
EuroScience Open Forum 2020
4 September 2020
1. I would like to thank Professor Stefano Fantoni for his kind invitation and the
conference organisers for their determination in setting up this event during these
very difficult times. In this presentation, I will focus on the well-known role of
human capital and innovation as determinants of economic growth and consider
how crucial delays in the field of knowledge may have translated, in Italy, into the
slow growth of gross domestic product (GDP) that we have observed in the last
30 years or so.
2. There is no need to emphasise how serious the public health emergency caused
by the rapid spread of the new coronavirus all over the world has become. Over
25 million of people are estimated to have been affected and close to one million
have lost their lives. Italy was the first western country in which the epidemic took
hold, in early 2020. The toll has been very high, with more than 250 thousand people
affected and 35 thousand deaths.
3. The drastic measures adopted to contain the propagation of the virus - which
have included the limitation of people's movements and social interaction, the
suspension of teaching in schools and universities, and the temporary closure of
many productive activities - have hit the Italian economy profoundly. As the latest
figures suggest, by mid-2020, GDP had returned to the level observed in early 1993
(slide 1 in the accompanying presentation). In per capita terms, GDP dropped down
to values recorded in the late 1980s.
4. The reason for this huge jump of about 30 years back in the past is twofold. The
first is, of course, the striking extent of the collapse of the economy due to the
pandemic: in the second quarter of this year, in particular, GDP fell by almost 13
per cent with respect to the previous quarter. As a result, in just three months GDP
lost more than during the whole 2008-2013 period, which includes the double-dip
recession related to the global financial crisis and the euro-area debt crisis, which
had already been the worst slump in peacetime since Italy's unification in 1861.
The second reason why we went so far back in the past is that, since the 1990s,
Italy's GDP growth has been extremely weak. While other advanced countries
have suffered similar or even worse declines of GDP in the second quarter of 2020
(-9.1 per cent in the United States, -9.7 in Germany, -13.8 in France, -18.5 in Spain),
no one has recorded such a huge jump back, because past growth has been much
more robust elsewhere. GDP has returned, for instance, to the level observed in
2014 in the United States, 2010 in Germany, 2002 in France and in Spain.
5. Tackling the difficulties created by the pandemic all over the world is clearly the most
urgent issue. With its diffusion, the prospects of long-lasting negative consequences
for economic activity, employment and the distribution of incomes have become
more daunting. Not surprisingly, the global response of governments, central banks,
and supervisory authorities in the majority of countries has been immediate and
extraordinary. Central banks, in particular, have used a wide array of instruments to
make monetary conditions more accommodative, counter the tensions in financial
markets and support lending to households and firms, avoiding a credit crunch. The
support of fiscal and monetary policy to aggregate demand will necessarily continue
in the foreseeable future, also to counter the substantial increase in precautionary
saving brought about by the surge in uncertainty produced by the pandemic.
6. For Italy, however, addressing the problems that have restrained growth for about
30 years is equally important. To this purpose, as I have argued many times, it
is essential to implement reforms aimed at creating a more business-friendly
environment, by raising the quality and efficiency of public services, increasing
the level of public investment, improving civil justice, reducing the administrative
and bureaucratic burdens that hamper private investment, lowering the weight
of tax evasion, corruption and other criminal activities. These reforms would yield
important results but, for an advanced country like Italy, they would not be sufficient.
7. When a country approaches the technological frontier, its income and wages no
longer allow for a development strategy based only on cost and price competition.
In this context, economic growth depends on the capacity to incorporate and foster
innovation, which requires adequate spending on new technologies, and on the
quantity and quality of investment in education, from primary school to university.
The delays accumulated in innovation and education and their interrelation with
the structure of the productive system are most likely at the root of Italy's weak
economic growth.
Innovation
8. A long-standing problem whose importance has increased in Italy in the more recent
decades is the very low level of spending in research and development (R&D). The
latest figures indicate that, in 2018, R&D expenditure as a share of GDP stood at
just 1.4 per cent, against 2.4 per cent in the average of the OECD countries, and less
than half of the level recorded in advanced economies like the United States and
Germany (slide 2). A comparison with China is also instructive: in the year 2000 the
incidence of R&D on GDP was 0.1 percentage point lower than in Italy, at 0.9 per
cent; 18 years later it was almost a full percentage point higher, at 2.2 per cent (an
even more impressive increase if we consider the striking growth of Chinese GDP).
9. Although the problem concerns both the public and private sectors, the gap with
developed countries is larger in the latter, where the share of R&D expenditure
is 0.9 per cent, about half of the OECD average (1.7 per cent). The overall
"investment in knowledge" of firms has been conveniently summarised in one
single indicator by the OECD, called "spending in knowledge-based capital", which
includes expenditures for software, R&D, copyrights, design, marketing research,
firm-specific training and organisational know-how. This indicator sees Italy among
the lowest-ranked countries in the OECD (slide 3).
10. The low private and public spending in R&D is reflected in the smaller number of
researchers compared to the main advanced countries. In Italy, they are only 5.5 for
each thousand of workers against almost 9 for the OECD. The number of patents,
normalised by the size of GDP, reflects these deficiencies, standing at less than half
with respect to the average for the OECD countries.
11. Despite these limitations, the quality of the research produced in Italy bears
comparison with the main European countries. For example, the share of Italian
journal articles ranking among the top 10 per cent of the most cited publications
in all fields of knowledge is higher than the shares of countries like France and
Germany (and higher that the average share for the European Union). In science,
the field-weighted citation impact of publications by authors working in Italy is
higher not only than those by authors in France and Germany but also than those
by authors in the United States (slide 4). The Italian research system also stands out
for its high productivity: its total number of publications in all fields of knowledge
normalised by the amount of spending in R&D is, for instance, twice as high as in
France and Germany.
Human capital
12. Low spending in research is matched by insufficient investment in education, which
depresses the level of knowledge and competence of the labour force - what
economists usually refer to as human capital. This problem has both a quantitative
and qualitative dimension, whose importance has increased as Italy has moved
closer to the technological frontier.
13. With regard to the quantitative dimension, data show that Italians do not attend
school long enough. Italy is in the penultimate place in the OECD for the share of
people between 25 and 34 years with a tertiary qualification, at 28 per cent, against
an average of 44 per cent for the OECD countries, with values above 60 per cent
for Canada, Japan and South Korea. It is the first for the incidence of population
between 15 and 24 years who are not in education, employment or training
(so-called NEET): for people aged 20-24, in particular, this share stands at 28.4 per
cent, more than twice the average share for OECD countries (slide 5).
14. While the low incidence of young people in employment and training depends
mostly on the persistent weakness of the Italian economy, the responsibility for
the low number of those in education is also shared by households, who do not
invest sufficiently in education. A key contribution to address this problem could
come from an enlargement of the supply of tertiary level programmes with a
professional content, which are more suitable for students who would not attend
more traditional courses. Professional tertiary programmes are still underdeveloped
in Italy, a phenomenon that explains a large part of the Italian gap.
15. The qualitative dimension of the education problem concerns the fact that Italian
students seem not to be learning enough. The Programme for International Student
Assessment (PISA) documents, at each round, that 15-year-old Italian students fall
below the OECD average in reading, mathematics and science - a disappointing
outcome for a country that would need to grow faster that the main advanced
economies in order to catch up their level of income per capita (slide 6). An
in-depth look at the latest data (for the year 2018) shows that this dismal performance
is largely the result of the delays in Italy's Mezzogiorno: while the North-West and
the North-East of the country perform above the OECD average, the South and the
Islands fall worryingly below (slide 7).
16. These gaps translate into analogous gaps for Italian adults. The Programme for the
International Assessment of Adult Competencies (PIAAC) carried out by the OECD
between 2013 and 2016 indicates that, at each age cluster, Italian adults perform
invariably worse than the average adult in the OECD (slide 8). In particular, it reveals,
for our country, a widespread lack of those skills - reading and understanding,
applying logic and analysing - that respond to modern life and work needs. For
example, in literacy proficiency, about 70 per cent of Italians appear to be unable to
understand long and articulated texts adequately (a result that makes Italy one of
the worst performers among the OECD countries participating in the test, in which
this share is, on average, about 50 per cent). In the numeracy test, a similar share
turns out to be unable to successfully carry out relatively complex reasoning about
quantities and data (against about 50 per cent in the OECD average).
17. Financial competencies are also low in the international comparison. According
to the survey conducted by the Bank of Italy at the beginning of 2020 as part
of an international programme started by the OECD, Italy ranks 23rd out of 26
countries according to a synthetic score that measures three areas of financial
literacy: knowledge, behaviour and attitudes. Italy's score is lower even than that of
non-OECD countries with very modest levels of GDP per capita. These findings
suggest that the gap in financial literacy with other countries is attributable only
in part to lower levels and quality of education or to other unfavourable social or
economic conditions and suggests that there is plenty of room for improvement
across all the areas of financial literacy.
18. One of the reasons for the gaps that I have just described is linked to the modest
level of spending in education, which is especially low at the tertiary level (slide
9). In 2016 the incidence of expenditure on tertiary education on GDP was 0.9 per
cent in Italy, one of the lowest shares in the OECD. More effective and, in some
cases, additional spending is required in many aspects. In primary and secondary
education, the preparation and motivation of teachers are essential and should
be adequately nurtured. Buildings and infrastructures are often obsolete and,
at times, have problems with their overall security, when they should instead be
technologically adequate and comfortable.
19. However, the obstacles to a better education are not only related to the supply
side. Demand for skilled workers has proved to be weak as well. The ratio between
the earnings of workers with a tertiary education with respect to those with upper
secondary education is lower in Italy with respect to the OECD (or the EU) average
(slide 10). This is a paradoxical result, which we highlighted many years ago: a lower
endowment of human capital, like in our country, should in fact determine a higher
return, as this production factor is in shorter supply (slide 11).
20. In part, the paradox could be explained by the specialisation of Italian firms in traditional
sectors and by the predominant role of small firms, for which the demand of highly
educated workers is typically weaker. The relatively low earnings of these workers,
however, could also be the result of a vicious circle between demand and supply of
human capital, triggered by the strategy of firms. Indeed, they may have reacted to
the perception of a generally low quality of education with a generalised offer of low
wages, which, in turn, would not have been sufficient to foster higher investment in
education by families. In addition, the difficulties in finding suitable skills in the labour
market could have resulted in firms consolidating their low propensity to invest in
new technologies, thereby containing the need for skilled labour.
21. Low returns and low demand for skilled workers are among the reasons that
encourage a high number of Italians, especially highly educated young people, to
migrate abroad. Between 2009 and 2018, 816,000 Italians moved their residence in a
foreign country (against 333,000 who repatriated to Italy); in 2018 out of the 157,000
Italians who emigrated, about 30 per cent had tertiary education while 25 per cent
had upper secondary education.
22. A large collective effort is required to reverse this vicious circle. Albeit low in the
international comparison, highly educated workers still preserve a sizeable earning
advantage with respect to less educated workers; moreover, they show a lower risk of
remaining unemployed and generally have more stable careers. Families and students
should therefore understand the importance of investing in knowledge, not only
at school but also throughout their whole lives. Additional investment by the State
should aim at modernising the infrastructures as well as at improving the training and
motivation of teachers. Private firms also have a key role to play. Their reaction to the
huge transformation induced by technological progress and globalisation during the
1990s was a demand for lower labour costs, instead of higher and adequate investment
in the new technologies. This would have spurred the demand for highly-skilled labour
possibly triggering a virtuous cycle of demand and supply of high education, to the
benefit of the business sector as well as that of society at large.
The structure of the production system
23. Innovation and education are shaped by, and in turn shape, the structure of the
productive system, which is extremely fragmented in Italy. A single observation well
summarises this problem. According to the latest available data (for the year 2016),
25,000 medium-large firms (with more than 50 employees) produce almost half
of the value added of the industrial and non-financial service sector, with almost
6 million employees; the other half is produced by 4.3 million small firms, with
6 million employees and 4.8 million self-employed workers. In France, Germany and
Spain, the share of value added produced by large companies is higher and the
incidence of self-employed workers, small businesses and their employees is lower
(slide 12).
24. Literature has emphasised the possible role of institutional factors in hampering
the dimensional growth of firms. Regulation, for instance, can be more severe
for larger firms or may prevent them from entering specific markets (such as in
professions or in retail trade); tax evasion may be easier for smaller firms, reducing
the incentives to expand their economic activity. More recently, many studies
have also focused on the importance of the quality of management practice. Their
role is twofold. On the one hand, the quality of management depends on the
size of firms; small firms, for example, have more difficulties in attracting the best
managers. On the other hand, managers determine firms' performance, including
their ability to grow.
25. Small firms around the globe are usually family-owned. In Italy, however, their
managers are mostly selected within the local market and often coincide with the
firms' owners or with their relatives. Family firms and small firms typically rely less
on good managerial practices, such as team working, performance-related pay, or
workers' participation in the decision making process. According to well-known
international surveys, the average quality of managers is, in Italy, lower than that
in the top-performing countries, a result that reflects not only the scarce diffusion
of high quality management, but also the lower level and quality of education in
general.
26. The "dwarfism" of the Italian productive system is strictly interrelated to the ability
of firms to introduce good managerial practices, adopt new technologies in order
to develop innovation of products and processes, and invest in human capital.
These features of our industries profoundly affect the average productivity of the
economy. Larger Italian firms are often more productive than the corresponding
French and German firms, but the very numerous group of smaller firms, which are
much less productive than those of the main competitors, brings the average down
(slide 13). Had Italy had the same firm size structure as Germany, its average labour
productivity would have been more than 20 percentage points higher, surpassing
the German level. Differences in the sectoral composition between the two countries
have a much smaller role in explaining the low productivity of Italian firms: had Italy
had the same industry composition of Germany, its labour productivity would have
increased, ceteris paribus, only by 3 per cent.
Italy's old delays and its recent dismal economic performance
27. A weak capacity to innovate, a low level of human capital, and a predominant
weight of small firms characterised Italy even when its economic growth was
rapid and outpaced that of most of the other developed countries. We should
not forget that, after the Second World War, Italy started a rapid process of
catching-up growth with respect to the United States (usually identified as the
country at the technological frontier). This process came to a halt in the late 1980s
and, since the mid-1990s, the gap between the two economies has been widening
(slide 14). In a country with a similar product specialisation such as Germany,
instead, the process of catching-up with the United States was interrupted only
temporarily, between the early 1990s and the mid-2000s, a period characterised
first by the German reunification and then by a sharp rise in US productivity
growth, but it resumed thereafter.
28. Two factors have contributed to halting Italy's catching-up and triggering its
long-lasting decline. First, as I have already mentioned, when an economy
approaches the technological frontier and its income and wages converge to those
of the most developed countries, an autonomous capacity to innovate is needed
to fuel economic growth. Second, the world has dramatically changed in the last
30 years, due to both the globalisation of markets and the information-technology
revolution, with the latter that is now driving the digital transformation of our
economies and personal lives.
29. In this new context, the importance of innovation and knowledge has grown.
Consider, for example, the quality of management: since the information-technology
revolution, this factor has become highly correlated with productivity growth. More
in general, Italy has paid the price of the delays that we have documented with
respect to the main advanced countries in terms of innovation capacity, human
capital, and fragmentation of the productive system.
30. With the recent development of digital technologies, Italy has unsurprisingly
started to accumulate a new delay. This is similar to the one observed in the
1990s with reference to the rise and diffusion of information and communication
technologies. Today as back then, also given their size, Italian firms seem unable
to take advantage of the adoption of the new digital technologies, which require
adequate skills and managerial capacities. As a consequence, not only is the
production of digital goods and services low, but their use by firms and households
is also modest. The index that summarises the level of digitalisation in Europe (the
Digital Economy and Society Index, DESI) places Italy in 25th place in the European
Union this year (slide 15). The gap with respect to the other countries is especially
large in the use of Internet services as well as in the digital skills of the population.
31. As a result of these dynamics, GDP per capita has slowed down since the
mid-1990s and, after the double-dip recession due to the global financial crisis
and the euro-area sovereign debt crises, has never been fully recovered (slide 16).
Labour productivity (measured by GDP per hour worked) started to stagnate in
the mid-1990s and its weakness persists today.
32. The key variable underlying the dynamics of GDP per capita and labour productivity
is the so-called total factor productivity: the component of production that
is not explained by the stocks of labour and physical capital employed in the
production process. Changes in this variable measure, albeit imperfectly, the gains
in the efficiency of production due, for example, to organisational changes, new
technologies or a better quality of human or physical capital not captured by the
statistical measurement of accumulated capital (slide 17).
33. The current economic crisis has shown that, in the short term, economic growth
depends on several, often unpredictable, factors. In the long run, instead,
productivity improvements are the key ingredient for economic development and
the most important factor explaining cross-country differences in income and
GDP (slide 18). It is for this reason that, in order to restore a path of sustainable
growth, measures necessary to undertake the urgent problems created by the
current pandemic crisis need to be flanked by interventions aimed at addressing
the obstacles that hamper innovation.
Why GDP growth matters
34. As most economists do, I have focused on GDP and its determinants. This indicator
has been subject, not only in recent years, to various criticisms concerning its
ability to grasp all the material aspects that define the conditions of an economy
and the fact that it neglects non-economic and intangible factors which, however,
contribute significantly to the well-being of a country. Several projects have been
undertaken in the past to provide a more comprehensive measure of welfare.
In the early 1970s, for example, Nordhaus and Tobin built a new indicator (the
"measure of economic welfare") which adjusted GDP by including non-market
activities, reclassifying government expenditures based on their impact on
households' access to key public services (such as transport, health and education)
and calculating amenity losses due to environmental pollution. However, their
conclusion was that the broad picture of secular progress, which GDP conveys,
remains valid even after the correction of its deficiencies.
35. Similarly, in the early 1980s Amartya Sen argued that a proper assessment of
well-being should take into account people's access to education, health, civil
rights, freedom of opinion, as well as to economic factors, such as income and
consumption. The practical implication was the construction of the so-called
"human development index", built by the United Nations, which integrates per
capita GDP with other indicators to measure the degree of well-being achieved in
the various countries.
36. More recently, high emphasis has been placed on the social costs of income
inequality, the impact of digitalisation and the environmental sustainability
of production. A set of guidelines for a comprehensive measure of well-being
and social progress has been recommended in the OECD Report Beyond GDP
(which described the results achieved by an expert group led by Joseph Stiglitz,
Jean-Paul Fitoussi and Martine Durand). Experimental indicators are currently
being produced in several countries under national initiatives. In Italy an "index of
equitable and sustainable well-being" (BES), which is based on both hard and soft
indicators covering twelve dimensions (such as health, education, safety, work
and leisure balance, social relationship, politics and institutions, environment) is
now computed and regularly updated.
37. Despite its limitations, GDP per capita appears to have a very strong link with
the fundamental variables for the well-being of a country. Considering data
for almost 200 countries referring to the year 2018, there is in fact a very high
correlation (of over 90 per cent) with the human development index (slide 19).
This close relationship does not arise only from the fact that GDP per capita is
one of the three main components of this index. Correlation is in fact high also
with the other two variables, life expectancy (i.e. the average lifespan expected
at birth) and level of education as measured by the United Nations (which is the
simple mean between the average years of schooling for audults and the expected
average years of schooling for children; slide 20). The relationship with the latter
in particular should not be surprising: on the one hand, a higher income allows,
on average, a larger share of the population to study; on the other hand, higher
levels of education tend, as we have discussed, to increase production efficiency
and the level of GDP. The link with life expectancy depends on the fact that rising
levels of GDP per capita are associated, among other things, with better nutrition,
higher hygiene conditions and more effective health systems.
38. There is one dimension in which GDP, however, does not perform well as a
measure of well-being, which stems from its impact on the environment. Data
also show, in fact, a dangerous correlation between GDP per capita and carbon
emission, which are harmful both for the health of human beings and for the
planet (slide 21). This cost of economic development can no longer be borne. In
the absence of more adequate incentives for "green" investment, more stringent
regulation, or higher taxation of the most polluting energy sources, the rise of
greenhouse gas emissions would lead to a worrying increase in the temperature
of the planet.
39. The main climatic models predict that, absent changes, the global temperature
would overcome the 1.5 degree threshold, with, according to the United Nations
Intergovernmental Panel on Climate Change, catastrophic effects for our planet.
This is a problem that, of course, goes well beyond national borders. Yet, the speed
at which the temperature is rising and the apparent inexorability of this trend are
such that a quick and strong response from all countries is required. Scientific
research has a clear role to play in addressing this unprecedented challenge. It
is time to direct increasing resources and efforts to address these side effects of
economic development. Knowledge is once again the key asset in which we need
to invest to make further economic progress, while protecting the environment.
* * *
40. Recovering the path of GDP growth that Italy interrupted 30 years ago is a question
with implications that go beyond the mere economic sphere. They affect the health
of its citizens, the quality of their leisure time, their overall standard of living. The
urgency of the problems posed by the pandemic should not make us lose sight of
this longer-term issue. In order to overcome this challenge, our economy needs an
intense technological and cultural transformation.
SLIDES

Italy's GDP is back to the level recorded in 1993
GDP in some advanced countries
(quarterly data; indices: 1993=100)
1
Source: Eurostat, U.S. Bureau of Economic Analysis
Spending on R&D is low...
Spending on research and development
as a share of GDP in 2018
and so is investment in knowledge...
Business investment in knowledge-based capital
as a share of GDP in 2015
3
Source: OECD
...but the quality of research is relatively high
Field-Weighted Citation Impact of scientific publications in 2015-16
4
Source: Anvur, Scopus
Italy has a very high share of NEETs...
Share of the population not in employment,
education or training, for different age clusters in 2018
5
Source: OECD
and school results are below the OECD average...
Results of the OECD PISA tests
...a problem mostly concerning our Mezzogiorno
Results of the OECD PISA tests in 2018:
the North-South divide
Source: OECD 7
Competences are low also for adults
Results of the OECD PIAAC tests in 2013-16 (1)
(score)
Spending in tertiary education is insufficient
Total expenditures in tertiary education
as a percentage of GDP in 2016
2,5
2,0
1,5
1,0
0,5
0,0
Italy
Chile
Spain Israel
Latvia Japan Korea
States
Poland France Turkey
Ireland Iceland Mexico Estonia Finland Austria
Canada
Sweden Zealand Norway
Slovenia Belgium
Republic Republic Hungary Portugal
Kingdom Australia
Lithuania Germany
Colombia
Luxembourg Netherlands
New
United
Czech
Slovak
United
9
Source: OECD
Returns to higher education are modest...
Earnings of workers with tertiary education with respect to workers
with upper secondary education, for different age clusters in 2017
(percentages)
250
200
156
139 138
119
150
100
50
0
Italy
Chile
Israel Spain
Korea
Latvia States
Poland France Turkey
Austria Ireland
Estonia Finland Canada Mexico
Sweden Norway Zealand
Belgium Average
Republic Portugal Republic Hungary
Australia Kingdom
Denmark Germany Lithuania
members - Colombia
Switzerland
Netherlands
Luxembourg
New
United
Czech
Slovak
OECD OECD
United
23
EU
25_64 25_34
10
Source: OECD
...with an Italian paradox: low supply and low returns
Relative earnings of workers with tertiary education and share of
population with tertiary education (aged 25-64) in 2017
earnings
Relative
ITA
ITA
Share of population with tertiary education
11
Source: OECD
The weight of small firms is predominant...
Value added shares by firm size Employment shares by firm size
in 2016 in 2016
50
50
45
45
40
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
...but only large firms bear
the international comparison
Average value added per worker by firm size in 2016
(thousands of euro)
80
70
60
50
40
30
20
10
0
Total 0_9 10_19 20_49 50_249 250+
France Germany Italy Spain
13
Source: Eurostat
Italy's catching up halted in the 1990s
GDP per capita and GDP per hour worked
with respect to the United States
GDP per capita GDP per hour worked
100 100
110 110
100 100
90 90
90 90
80 80
80 80
70 70
70 70
60 60
60 60
50 50
50 50
40 40
40 40
30 30
30 30
20 20
1950 1960 1970 1980 1990 2000 2010 2020 1950 1960 1970 1980 1990 2000 2010 2020
Germany Italy Germany Italy
14
Source: OECD and Penn World Table
A new delay is emerging in the development and
utilisation of digital technologies
Digital Economy and Society Index and its components in 2019
15
Source: European Commission
The stagnation of productivity has continued even
after the double-dip recession of 2008-2013
Economic growth and productivity
(indices: 1970=100)
240 240
220 220
200 200
180 180
160 160
140 140
120 120
100 100
Productivity growth is the key to long-term growth...
Average growth rates of GDP, labour productivity,
hours worked and total factor productvity (TFP)
3,0
2,5
2,0
1,5
1,0
0,5
0,0
1970-1985 1985-1995 1995-2007 2007-2014 2014-2018
-0,5
-1,0
-1,5
GDP Labour productivity TFP Hours worked
17
Source: AMECO
...and the variable that best explains cross-
country differences in GDP per capita
GDP per capita and labour productivity in 2017
(thousand of 2011 US dollars)
capita
per
USA
GDP
ITA
ρ = 0.98
Labour productivity
18
Source: Penn World Table
GDP per capita highly correlated to the human
development index...
Human de