Behind economic growth, the crucial role of productivity

Economic debates are often dominated by growth, inflation, unemployment, or public debt. Yet, when it comes to explaining why some countries become sustainably wealthier while others progress more slowly, economists almost always return to the same concept: productivity. Behind this sometimes misunderstood term lies one of the main determinants of long-term living standards.

Productivity measures the amount of wealth produced from a given volume of resources. In other words, it seeks to answer a relatively simple question: With the same number of workers, the same machines, or the same hectares of land, does an economy produce more than before?

This concept is often mistakenly reduced to the speed of work or the intensity of effort exerted by employees. In reality, productivity depends on a much broader range of factors. The technologies used, the quality of infrastructure, the level of workforce training, the organization of companies, access to energy, and the efficiency of institutions all directly influence an economy's ability to produce more value.

Economists are so interested in this because, in the long run, sustainable growth rarely stems from an indefinite increase in the number of workers or the volume of investment. A labor force may grow for a while, but this momentum eventually slows. Investment may also increase, but its return generally tends to decrease over time. Productivity, on the other hand, allows us to produce more without necessarily mobilizing more resources.

Global economic history provides numerous examples. Between 1950 and 2020, much of the increase in living standards observed in developed economies stemmed from productivity gains linked to technological innovation, industrialization, improved education, and infrastructure modernization. According to research by the OECD and the World Bank, productivity growth accounts for a significant portion of per capita income growth in high-income countries.

This reality also applies to Africa. The continent has one of the youngest populations in the world and is expected to be home to nearly a quarter of the global population by 2050, according to the United Nations. This demographic dynamic can support growth, but it does not, in itself, guarantee a rise in living standards. If output per worker increases only slightly, population growth does not automatically translate into collective prosperity.

The agricultural sector provides a concrete example of this challenge. In several West African countries, agriculture still employs between 30% and 50% of the working population. Yet, its contribution to national wealth is often less than this proportion. According to the African Development Bank, African agricultural yields frequently remain below the averages observed in other regions of the world for many crops.

Let's take the example of rice. Yields can exceed 6 tons per hectare in some highly mechanized areas of Asia, while they sometimes remain below 3 tons in several African regions. This difference is not explained by a difference in the effort exerted by farmers. It stems more from access to irrigation, improved seeds, fertilizers, mechanization, and storage infrastructure.

Senegal also illustrates this issue. The stated ambitions in agriculture, industry, digital technology, and hydrocarbons largely depend on the ability to increase the value produced per worker. A new factory, better access to electricity, or improved logistics can allow a company to produce more with the same workforce.

International comparisons reveal the extent of the disparities. According to World Bank data, the value added produced per worker in high-income economies often exceeds $100,000 per year, while it remains below $10,000 in many sub-Saharan African countries. These figures do not reflect a difference in individual capacity among workers. They primarily reflect disparities in equipment, training, available capital, and economic organization.

Infrastructure plays a major role in this equation. A company facing frequent power outages, high logistics costs, or significant transport delays generally produces less value than a company benefiting from a more efficient environment. According to the African Development Bank, the infrastructure deficit costs some African economies several percentage points of potential growth each year.

Education is another key factor. World Bank studies show that improving human capital directly influences worker productivity. A better-trained employee learns new tools more quickly, adapts more easily to technological changes, and contributes more effectively to production processes.

The advent of artificial intelligence and automation has put productivity back at the heart of global economic debates. The International Monetary Fund estimates that nearly 40% of jobs worldwide could be affected, to varying degrees, by generative artificial intelligence. The exact effects remain a subject of debate, but much of the analysis converges on the idea that these technologies could accelerate productivity gains in several sectors.

This issue is closely monitored by central banks, governments, and investors because it directly influences a country's growth potential. An economy capable of sustainably improving its productivity can generally experience wage increases, rising tax revenues, and an improved standard of living without automatically triggering inflationary pressure.

Conversely, when productivity grows slowly, the scope for growth becomes more limited. Businesses find it more difficult to raise wages, governments have fewer tax revenues, and growth tends to slow.

Productivity is therefore not just one indicator among many. It allows us to understand an economy's capacity to create more wealth with the resources it already possesses. This is precisely why economists pay it so much attention. Behind the growth figures published each quarter, it is often the evolution of productivity that determines a country's economic trajectory over several decades.