The World Bank yesterday released a new report presenting a range of diagnostic and analytical tools for studying productivity.
The report, which challenges many established approaches and policy recommendations in the areas of trade and innovation, was created to help emerging economies drive up productivity in order to boost economic growth.
“if we’re going to understand why productivity has stalled in recent decades, despite spectacular advances in technology, we need to take a step back and look at what really drives productivity and how we can help developing countries move up the productivity ladder,” said World Bank Equitable Growth, Finance and Institutions vice president, Ceyla Pazarbasioglu.
The report found that policies designed to drive private sector growth needed to ensure that resources were received by the most productive firms and improved on productivity, quality and the demand base of existing firms while cultivating new, dynamic startups.
It also noted that policies needed to focus on improving the business environment and human capital in emerging markets.
“For companies to continuously innovate and grow, they need individuals who are open to new ideas, can tolerate risk, and are driven to achieve results,” said Pazarbasioglu. “These factors will either encourage or hinder a firm’s ability to adapt to policy, technological advancement and competition.
“Even if an operating environment is nearly perfect, with no distortions and with all market failures resolved, if there are no entrepreneurs with the necessary human capital to take advantage of it, there will be no growth.”
The report urged governments to rethink their role in nurturing productivity, including setting the right framework of economic incentives and resolving a broad set of potential market failures across areas ranging from infrastructure to innovation.
