Yeasty investment and mushroom productivity growth: An industry perspective on European and American performance, 1987-2003

Marcel Timmer, Department of Economics, University of Groningen

This paper provides an industry perspective on the sources of labour

productivity growth in France, Germany, Netherlands, the UK and U.S. for the period

1987-2003. U.S. growth has been higher since 1995 because of higher ICT investment

and TFP growth. European labour productivity growth slowed down due to slower

investment in non-ICT assets. Despite these differences, the industry patterns of growth

are similar in both regions. The industry pattern of investment in ICT and non-ICT assets

is balanced or ‘yeasty’ while TFP growth is more localized in a number of industries, a

‘mushroom-like’ pattern. The former finding suggests macroeconomic forces are

important for investment, while the latter phenomenon is still unexplained.

Date: 29 November-00 0000