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July 1995, Vol. 118, No. 7
I n a comparison of manufacturing multifactor productivity between three G-7 countries over the 1956-93 period, the largest average annual rate of increase, 3.1 percent, occurred in France. Germany followed at 2.3 percent and the United States with a 2.1 percent.
After 1973, the growth rates slowed in all three countries. The rate in the United States picked up in the 1979-93 period, but evidence of such a recovery in Germany and France remains to be seen. Because manufacturing multifactor productivity is strongly affected by the business cycle, observers must wait for the cyclical disturbances to subside in those countries for a more definite answer.
Labor hours in U.S. manufacturing rose slightly over the full period studied; they declined significantly in Germany and France, particularly after 1973. At the same time, capital services inputs were increasing steadily in all three countries. The result was an overall substitution of capital labor, which was especially vigorous in Germany and France before 1973, and intensifying in the United States after 1973.
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