Trends and Drivers of Productivity Growth in Latvia

Abstract

Designing policies to rise in productivity and understanding global challenges affecting the growth is an important current issue. Trends and drivers of productivity growth continue to be a key theme for researchers and policy makers. Productivity growth has generally slowed over past decade. OECD, IMF, World Bank, the European Commission deal with different aspects of productivity. The research aims are to analyse foundations of productivity measurement and causes of actual trends, policies fostering productivity growth and promoting sustained economic growth. The research consists of two parts. In the first part, review of research papers on productivity has been done. The OECD methodology of productivity measurement and relations between structural reforms and productivity growth is the focus of this part. Second part of the research deals with trends and causes of the current situation. The problem of productivity growth in Latvia and in the EU is analysed based on empirical data and calculations. This part of the research is also dedicated to economic policy fostering productivity growth. Results of the paper find different factors with negative impact on productivity, and factors with positive impact on productivity. Effects on productivity depend on the purpose of productivity measurement as well as on impact on productivity in the short-run or in the long-run.