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Britain's Productivity Gap with the United States and Europe: A Historical Perspective

Published online by Cambridge University Press:  26 March 2020

Stephen Broadberry  and
Mary O'Mahony
Stephen Broadberry*
Affiliation:
Department of Economics, University of Warwick, CoventryCV4 7AL
Mary O'Mahony*
Affiliation:
National Institute of Economic and Social Research
*
e-mail: S.N.Broadberry@warwick.ac.uk
e-mail: m.omahony@niesr.ac.uk
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Abstract

Since the mid-1990s, an almost universal belief has developed amongst economic commentators that the United States has undergone a productivity miracle and that European economies are now suffering from chronic sclerosis. As a result, the ‘American model’ dominates the agenda of policy towards growth and productivity performance in Britain. This paper urges caution here, given the disappointing experience of earlier British growth policies based on borrowing from the fashionable economy of the moment, including the Japanese and German economies during the 1970s and 1980s, and the American economy (again) during the 1950s and 1960s. A historical perspective suggests that: (1) successful productivity performance requires a stable institutional framework for long-term investments in human and physical capital, which the European model has been particularly good at providing over the last half century; (2) a country is constrained by its geography, so that copying without adaptation to local circumstances is rarely a good policy; (3) it is important to pay attention to the different sectors of the economy when formulating policy.

Type
Articles
Information
National Institute Economic Review , Volume 189 , July 2004 , pp. 72 - 85
Copyright
Copyright © 2004 National Institute of Economic and Social Research

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Footnotes

The authors would like to acknowledge the support of the ESRC/EPSRC Advanced Institute of Management Research (AIM) under grant number RES-331-25-0009 for this research, and the comments of Nick Crafts on an earlier draft. Remaining errors are our responsibility.

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