The ICOP Manufacturing Database: International Comparisons of Productivity Levels

International productivity comparisons have traditionally focused on productivity growth rates. International productivity level comparisons are much more complex, requiring comparable industry data and estimates of purchasing power at a detailed industry level. The International Comparisons of Output and Productivity (ICOP) project established at the University of Groningen in the Netherlands in 1983 has pioneered the development of international estimates of productivity levels by industry. In this article Bart van Ark and Marcel Timmer, two economists from the University of Groningen, provide an overview of the ICOP manufacturing database. They note that the novelty of the ICOP approach is the derivation and use of industry-specific purchasing power parities based on producer output data instead of final expenditure information. A key finding that emerges from their research is the difference between labour productivity levels measured in terms of output per person employed and per hour. By the former measure, the United States has by a wide margin the highest level of labour productivity in manufacturing. But when the more appropriate output per hour measure of productivity is used, the United States is no longer the manufacturing productivity leader, being surpassed by the Netherlands and Belgium. The much greater number of annual hours worked in the United States accounts for this discrepancy.