WRITTEN QUESTION E-3310/02

by Bartho Pronk (PPE-DE) to the Commission

(21 November 2002)

Subject: Follow-up question to Written Question E-2710/02 on the comparability of EU and US figures

The Commission's answer to Written Question E-2710/02(1) includes the following statement: Given that a range of alternative methods might be used in place of hedonics, the alternative methods could be expected to give a range of results. The Commission thus acknowledges that figures for economic growth in the European Union and the United States are difficult to compare. According to The Economist, this also applies to the measurement of productivity growth. The magazine writes that in the United States productivity growth is measured as output per hour, whereas in Europe it is measured as output per worker (The Economist, 18 May 2002). If the relevant calculations were based on output per hour, the differences between the EU and the US would be smaller.

1. Given the apparent impossibility of comparing figures for economic growth, how can the EU measure whether the strategic goal laid down in Lisbon has been achieved or not?

2. Does the Commission endorse the argument put forward by The Economist?

3. The Economist also writes that GDP (gross domestic product) increased by 1,2 % in the US in 2001, whereas NDP (net domestic product, i.e. corrected to take account of capital consumption) fell by 0,1 %. Can the Commission confirm these figures, and state what the EU's NDP was? The Economist takes the view that NDP is a better indicator of economic development. Does the Commission share this view?

4. On the basis of NDP per hour worked, how do the respective figures for the EU and the US compare in recent years? What conclusions can be drawn from such a comparison?

5. What implications do these differences in statistical methods have for the results of OECD studies?

(1) OJ C 52 E, 6.3.2003, p. 204.

Answer given by Mr Solbes Mira on behalf of the Commission

(8 January 2003)

1. The Commission notes that a very considerable degree of harmonisation work has been undertaken within the Community on economic statistics, and work will continue to improve price deflation methods. The Commission will shortly produce a new Decision to provide a legal basis for

this further improvement. The Commission notes that the structural indicators used to monitor the implementation of the Lisbon process include two productivity measures one for productivity per head and one for productivity per hour worked.

2. The Commission believes that it is important to look at both productivity per head and productivity per hour worked when comparing productivity between countries. That is why the structural indicators include both measures. It is true that on a per hour basis the productivity differences between the Community and the United States are smaller. There are however some recognised quality problems with the available data on hours worked, and the Commission is currently working with Member States to improve the timeliness and comparability of this data.

3. The figures for growth of the gross domestic product (GDP) in the United States have been revised. The latest figures for the United States are 0,3 % growth for GDP in 2001 and a fall of 0,9 % for net domestic product (NDP). On latest estimates of the 15 Member States' (EU 15) NDP grew by 1,2 % in real terms between 2000 and 2001. The Commission notes that the choice between use of GDP or NDP to measure growth depends on the concept that one is seeking to measure, and on the quality of figures for consumption of fixed capital (which represents the difference between GDP and NDP). Given that consumption of fixed capital is usually measured by use of a model based on simplifying assumptions, the Commission believes that the GDP measure is likely to be more reliable.

4. Data for Net Domestic Product per hour worked are presented below. The data are at current prices based on purchasing power parities (PPP). The data show that using an NDP-based indicator of productivity produces a wider gap between Community and United States productivity levels in the years presented than the more traditional indicator based on GDP.

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5. The Commission needs more precise details of which studies the Honourable Member refers to. The Organisation for Economic Cooperation and Development produces many studies in this field.