Report

When, and why, did US growth became stronger than euro-zone growth?

When comparing trends in gross domestic product in the United States and the euro zone, we see that it was primarily from 1996 that US growth became stronger than euro-zone growth. What happened around 1996? We can imagine that: Demographics in the United States became much more dynamic than in the euro zone, allowing employment to grow faster in the United States; Non-housing capital accumulation in the United States became faster than in the euro zone; Total factor productivity (technological progress) in the United States started to grow faster than in the euro zone, and we can look for the causes (rate of investment in new technologies, level of R&D spending) of this situation. We see that the cumulative growth advantage of the United States (38 percentage points between 1990 and 2023) breaks down as follows : The gap in employment growth in favour of the United States (15 pp) ; The gap in capital stock growth in favour of the United States (15 pp); The cumulative growth gap in total factor productivity to the advantage of the United States (8 pp) .
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Natixis
Natixis

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