2 - The contribution of services to the productivity performance of the whole economy

Summary

Introduction

Although data on comparative labour productivity at the aggregate level have been used widely by economists and economic historians since they were brought together in an important series of publications by Maddison (1964, 1982, 1991, 1995, 2001), there has been much less systematic quantitative work on how this aggregate productivity performance can be broken down by sector. This absence of comparative productivity level data on a sectoral basis has allowed a number of serious misunderstandings about Britain's comparative economic performance since the mid-nineteenth century to persist. One of the aims of this book is to correct these misperceptions and to establish firmly the sectoral patterns of Britain's comparative productivity performance during this period.

Before outlining the sectoral breakdown, it is important to establish the patterns of Britain's comparative labour productivity performance at the aggregate level. For the US/UK and Germany/UK cases, the aggregate picture is widely agreed. The figures in tables 2.1 and 2.2 refer to GDP per person engaged, but the levels and trends are very similar to Maddison's (1995) well-known comparative data on GDP per hour worked. Around 1870 aggregate labour productivity in the United States was about 90% of the British level, but US overtaking occurred in the 1890s. The United States then forged ahead, reaching a peak labour productivity lead around 1950, after which Britain slowly narrowed the gap. In 1871 aggregate labour productivity in Germany was less than 60% of the British level.