tailor-made policy mix. To improve the effectiveness of future innovation policy we advocate an
increasing use of experiments and an increase in evaluation and accountability.
2. Policy aimed at productivity growth: a closer look
Ultimately, productivity growth provides the basis for economic welfare. However, it is useful to make a
few remarks to put it in the right perspective.
2.1. Welfare growth: productivity and participation
If we look at the economic position of Europe, it is useful to bear in mind that indicators such as growth
rates or the level of GDP per capita are determined both by participation and productivity. Productivity is
usually measured as GDP per hour. Based on this indicator, the Netherlands is one of the most
productive countries in the world. For example, the Netherlands is more productive than the U.S.
(Figure 1)
Figure 1 - Participation and productivity-50%-30%-10%10%30%1950 1960 1970 1980 1990 2000GDP per capita GDP per hour
hours worked participationSource: Groningen University and The Conference Board, GGDC Total Economy Database,
2002, http://www.eco.rug.nl/ggdcDespite the high productivity performance, GDP per capita is considerably lower. Although in the last
decade, participation has risen up to the US-level, the number of hours that an average Dutch employee
works (1350 hours), considerably stays behind that of his American counterpart (1800 hours). This huge
difference is the result of the greater importance of part-time work and the lower full-time workweek in
the Netherlands. More than one-third of Dutch employees work 30 hours of less per week compared to
13% in the US. A fulltime job in the Netherlands requires 1700 hours against almost 2000 hours in the
US. Hence, when it comes to increasing GDP growth, the possible gains in Europe through stimulating
labour market participation are tremendous and remain at least as important and urgent as productivity
growth. The ageing of the population in OECD countries strengthens the need to develop a broad and
sound economic basis.
2.2. Productivity growth: comparative advantages and terms of trade
At the global level productivity growth is an important determinant of welfare growth. More production
can directly be used to increase consumption or to increase investment leading to higher future output
and consumption possibilities. However, at the national level the link between higher production growth
and consumption growth is somewhat weaker.