WGS And Strategy Middle East Unveil Expanded Productivity Potential Index For 2023

The World Governments Summit (WGS) has introduced the second edition of the Productivity Potential Index (PPI), developed with Strategy& Middle East, a part of the PwC network. This edition expands its analysis to 60 countries, up from 25, offering a broader perspective on productivity drivers in today's world. The PPI redefines productivity measurement by integrating dimensions like environmental sustainability, well-being, innovation, and institutional quality.

The report highlights untapped potential within Gulf Cooperation Council (GCC) economies. By enhancing their weakest productivity factors, regional GDP growth could rise from 3.5% to 6.0%, potentially adding $2.8 trillion to the region's GDP over the next decade. If all countries in the PPI sample improved their weakest productivity indicators to match top performers, it could boost the global economy by $87 trillion.

Among GCC nations, Saudi Arabia leads with a PPI score of $69.3 per hour worked, followed by Kuwait at $60.8, Qatar at $57.2, and Bahrain at $56.9. The UAE scored $48.7 per hour worked in this analysis. Notably, Bahrain, Qatar, Saudi Arabia, and the UAE rank among the global Top 10 in 'physical capital,' contributing an additional $22-24 per hour worked to their productivity potential.

Physical capital encompasses reliable infrastructure and well-maintained equipment that enhance productivity. The GCC's success illustrates how targeted policies and investments in manufacturing and internet infrastructure can drive rapid sectoral growth.

Traditional productivity measures often fall short in capturing modern challenges like climate change and social transformation. These outdated tools focus on past performance rather than future opportunities. The PPI is a forward-looking tool that helps nations understand their true productivity potential by expanding traditional metrics to include social capital and institutional quality.

Dima Sayess from Strategy& Middle East emphasised: "Our analysis shows that non-traditional measures of productivity are shaping the direction of change regionally and globally." Understanding these mechanisms allows policymakers to develop effective solutions.

PPI's Unique Features

The PPI stands out for three reasons: it identifies strengths and weaknesses; focuses on impactful levers for growth using benchmarks from top-performing nations; and provides actionable pathways for policymakers to close gaps and enhance performance.

Powered by a machine-learning model, the PPI combines advanced analytics with academic insights on productivity. Its credibility is ensured through rigorous testing by leading international economists.

Insights for Policymakers

"The Productivity Potential Index offers policymakers critical insights," said Chadi Moujaes from Strategy& Middle East. It serves as a practical tool for identifying areas with significant potential to boost productivity and economic growth.

The report reveals key trends: 'Beyond GDP' alignment shows how growth intersects with decarbonisation and social cohesion, supporting progress toward UN Sustainable Development Goals (SDGs). Effective governance drives productivity by fostering entrepreneurship while ensuring efficient resource use.

Focus on STEM

While human and physical capital are foundational pillars for productivity, scientific research differentiates high-potential economies from others. This shift towards knowledge-driven growth is expected to continue globally.

This edition includes an online policy simulator allowing users to compare 60 countries across 19 indicators. It provides actionable insights into optimising resources for enhanced productivity outcomes.

With inputs from WAM