World Energy Outlook 2007

In India, labour productivity, measured as value added per person, is estimated
to be about 13% of productivity in the United States (Figure 14.3).
There is substantial potential for further growth through labour productivity
gains. These will be greater if labour moves to the formal sector of the economy.
Productivity gains will be lower if agricultural workers take jobs in the informal
sector in Indian cities. 6 India will need to invest more in education and training
in order to capture the full potential from productivity gains.
30
Figure 14.3: Labour Productivity* in Selected Countries Relative
to the United States (productivity in United States = 100)
index (United States = 100)
20
10
0
Hungary Czech Poland Turkey China India
Republic
* Value added per person in employment (PPP-adjusted).
Source: Van Ark et al. (2006).
14
Drivers of Growth
Capital productivity and total factor productivity increased considerably
after 1993 (Figure 14.4), when economic reforms launched at the beginning
of the 1990s started to take effect. In the period 1993-2004, increased
productivity accounted for well over a third of the 6.5% annual increase
in output (Bosworth and Collins, 2007).
The service sector has seen the biggest gains in productivity since the early
1990s. More recently, industry has experienced faster gains: a surge
6. Economic activity in the informal sector of the economy is undeclared and is not included in GDP.
If former agricultural workers take up jobs in the informal, non-agricultural sector, the effects on
productivity are very modest (OECD, 2007).
Chapter 14 – Political, Economic and Demographic Context 431