Europe’s Declining Productivity Growth: Diagnoses and Remedies
11 Dec 2024
14:00 -15:30
Times are shown in local time.
Open to: All
Room W4.05 (Cambridge Judge Business School)
Trumpington St
Cambridge
CB2 1AG
United Kingdom
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Speaker: Gee Hee Hong, International Monetary Fund
About this seminar
Europe’s widening per capita income gap with the United States primarily reflects a rising productivity shortfall with deep firm-level roots. Compared to those in the United States, Europe’s large leading firms innovate and grow less, while young high-growth firms have a smaller footprint in the economy.
With these productivity growth engines being muted and unsuccessful firms exiting less than in the United States, Europe also suffers from an overabundance of stagnant mature firms. Gee Hee and colleagues at the IMF highlight the role of smaller markets and limited equity financing as bottlenecks holding back Europe’s large leading firms from scaling up and innovating. This is a particular concern in tech sectors, where Europe has been falling behind the most. As for young high-growth firms, this IMF work underscores the importance of human capital in fostering their formation and the need for a greater availability of risk capital to realise their potential.
Over and above long-documented policy priorities, such as improving the design and coordination of public support to research and development, tertiary education systems, and the corporate sector, the findings highlight the critical role of removing intra-Europe barriers to factor and product markets integration for improving business dynamism and reviving Europe’s productivity growth.
This regional agenda needs to be complemented by domestic reforms that lower barriers to firm entry, facilitate exit, and remove tax and regulatory disincentives to grow.
Speaker bio
Gee Hee Hong is a senior economist in the IMF’s Italy team in the European Department. Previously, she worked in the IMF’s Research Department, Asia and Pacific Department, as well as the Fiscal Affairs Department. She holds a PhD in economics from the University of California, Berkeley. Prior to joining the IMF, she worked at the Bank of Canada (2012-2014) as a senior analyst. She has a wide array of interests ranging from demographics, inflation dynamics, productivity, and fiscal issues. Shas published in several peer-reviewed journals, including the American Economic Review, the Review of Economics and Statistics, the Review of Financial Studies, and the Journal of Monetary Economics.
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Please note, this workshop is an in-person event, but in case you are not able to attend, you can also join the workshop virtually on Zoom.