The decreasing growth rate of productivity has been noticed in the USA and several Western European countries ever since the 1960’s, but after the last global recess the growth of productivity in global economy has been very modest as a whole. Estonian economy and that of other Central and Eastern European countries has not escaped that. Reasons are usually the languishing investments post crisis, low demand in world economy, and general instability dominant in the economic environment.

Continuously greater offering of technology-based services and growing digitalisation of production is likely one of the important processes altering the game rules that dominates the economic models and global value chains. However, it has been found that one reason for the slowing pace of productivity growth is related to technology and digitalisation – although it brings forth considerable gain in terms of efficiency and changes business processes and models, different barriers accompany it, which is why the effect of digitalisation may turn negative in a short-term perspective.

The level of integration in world economy has grown significantly over the last couple of decades and more and more economic activity is carried out in global value chains. In 2013, nearly 80% and in 2016 already 85% of the total international trade was done via global value chains. The prerequisites of the fast developments of global networks have been the development of telecommunication and transport infrastructure, as well as demand for more quality input at every stage of the value chain. Although globalisation has emphasised Asia’s role in international trade, it has been found that with the implementation of new technologies in production and supply chains, global production and trade can be directed back to the OECD countries.

The development scenarios offer a wide spectrum of economic policy discussion points and this, foremost, constitutes but one out of many input in the development process of smart policy formation. Policy makers and decision makers can rely on this base when discussions are held in business, economy, and productivity growth supporting policy strategy drafting.

Research Materials:

Facts about early-stage entrepreneurial activity in Estonia in 2012–2017 according to GEM study (PDF)

How different types of investments support productivity growth? (PDF)

How are investments by enterprises linked to their position in the value chain? (PDF)

Research Summary: Productivity Scenarios 2035 (PDF)

Future scenarios for productivity growth (PDF)

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