Perspectives on Productivity: Honorary Lecture by Professor Bart van Ark

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At the HSE’s XXII April International Academic Conference, Bart van Ark, Professor of Productivity Studies at the Alliance Manchester Business School and the Managing Director of the Productivity Institute (the University of Manchester), will deliver an honorary lecture ‘Perspectives on Productivity: Benefits to Economy, Business, Workers and Society’ on April 14. He will also be participating in the roundtable on Productivity, Diversification and Sustainable Economic Growth. The roundtable will be held on April 15 and will be chaired by Professor Jakobson.

Professor van Ark’s lecture is co-organized by HSE University and International Association for Research in Income and Wealth. HSE University is an institutional member of the association along with leading international organisations and think tanks such as International Monetary Fund, World Bank, and Organisation for Economic Cooperation and Development. Bart van Ark is a long-standing member of IARIW.

Professor van Ark has been cooperating with HSE University for a long time already. Back in 2007, he officially invited HSE University to join World KLEMS movement on productivity research.  ‘I have been following HSE’s work on the economic growth with great interest, and in particular the research on productivity in Russia and the growth contributions from Capital (K), Labour (L), Energy (E), Materials (M), and Services (S) in Russia. Prof. Ilya Voskoboynikov and I worked together at the University of Groningen in the Netherlands, where the Russia KLEMS project originated alongside the EU KLEMS project, which I led during the early 2000s,’ explains Professor van Ark.

In his honorary lecture at the April Conference, Professor van Ark will be talking about reasons for the slowdown in productivity growth around the world and possible measures that can help unlock productivity again.

Professor Bart van Ark

There has been quite some concern that despite the significant increase in digital technologies, productivity growth has slowed significantly over the past 15-20 years. This New Productivity Paradox, paraphrasing Nobel Prize winner Robert Solow, means that “you see digital technologies everywhere except in the productivity statistics”.

Indeed, the way we measure the output of digital technologies might have led us to understate the effect, but it is not the whole story. Weak demand and low investment following the Global Financial Crisis may also have played a role. 

Another important explanation is that companies need to develop so-called absorptive capacity to adopt the new technologies and change business processes to develop new products and services using the technological opportunities. 

It is therefore largely a matter of time to see the productivity effects of digitization play out

We already see productivity improvements in firms and industries that have made significant investments in digital technologies, improved the management and digital skills of their workforce and made their organizations more agile in adoption the technologies.

The pandemic created a big hit to productivity, as the lockdowns in most countries caused a rapid decline in output. Many job protection and furlough programs were implemented to keep workers on the payroll even without much business happening.

But after a while we saw positive effects too. For example, there is evidence that the shift from the office to working from home has worked quite out quite a bit better than companies had imagined

With the help of digital technology and virtual conferencing, many workers could use their time more efficiently and to the extent that products and services could be made available through e-commerce or other digital means, many companies saw less damage than expected.

On the other hand, the effects have been very unequal. Especially lower-income workers in production industries were put at risk of infection. Others working in hospitality industries simply had no work at all. Many people lost opportunities to improve their skills through schooling or on-the-job training which could have longer-term effects on their productivity performance.

Once the economy opens up again, demand will recover quickly and that will have positive effect on economic activity and productivity. So overall, 2021 may not be the year we should be most concerned about

However, we do not want everything to go back to how it was before the pandemic. It is important that companies seize the advantage of having learned to better use digital technologies during the pandemic for future activities. Consumer behaviours may change as a result of the pandemic, and companies need to adapt.

There are also the challenges of dealing with the consequences of climate change and rebuilding a greener economy, which require investments in non-fossil energy sources, products and services. Only a culture of continuous innovation by companies, and driven by effective government policies at local and regional level to connect businesses, schools and colleges and research institutions, can help to deal with those challenges.

Another concern for the productivity recovery is the risk of increased inequality

Some industries, especially goods and tech-intensive sectors may be doing well, whereas other sectors, such as hospitality industries, may struggle to adjustment to new consumption patterns. Firms that are more advanced in digital transformation will gain ground relative to those that haven’t.

Workers that don’t see their skills erode can be easily employed in new activities, firms and industries. Others may see an erosion of their skills, and not able to come get back to the labour market.

Government should not only think about better and higher education for new workers, but also about vocational training and other skill development programs for existing workers

As Director of The Productivity Institute in the United Kingdom, Professor van Ark is overseeing academic research, business engagement and policy development in the area of productivity. The Institute’s research focuses around investment in human, knowledge and organizational capital, regional productivity differentials, macro-economic and institutional aspects of policy, measurement & methods and the impact of large transitions, such as climate change and digital growth, on productivity. Professor van Ark is currently working on the impact of digital transformation on productivity, the productivity effects in the aftermath of the COVID-19 pandemic. He also has a strong interest in the relationship between productivity, well-being and living standards.

Conference Programme