Performance 2008: Productivity, Employment, and Growth in the World's Economies

Low productivity growth (under 2 percent) in the United States, Europe, and Japan in 2007 contrasts sharply with high growth (more than 8 percent) in the BRIC countries—Brazil, Russia, India, and China. Productivity levels in emerging economies are only 10 to 40 percent as high as those in the United States, but lower wages give them a competitive advantage, keeping their manufacturing costs at 20 percent of U.S. levels. Meanwhile, the spending gap between emerging and established economies in research and development and information technology is narrowing, reflecting newer economies’ commitment to competing based on innovation and not just cost.