China, India remain largest and most dynamic economies: Report

China and India have topped yet another global league table, this time for growth in labour productivity. The findings of a report by the new York based thinktank, the Conference Board, says that China and India remain the largest and most dynamic economies, with 8.7 % and 5.4% total growth in labour prodeuctivity in 2010.

China and India account for a third and a tenth, respectively, of all output produced by emerging and developing economies, and thus heavily influence the global productivity trend, the study which covers both advanced and emerging countries says.

However, total factor productivity, which takes into account contribution by all factors of production, shows a divergence – while China has consistently shown a rising pattern since 1995, India’s has slowed down since 2005, compared to China.

“China has shown a strong output growth since 2005, while India’s transition to a higher growth path has been more resource-consuming and more constrained by a continuing need for reforms,” the report says, and that a lot of potential for efficiency gains need to be realised. In 2010, India’s employment levels grew by 2.3%, with and GDP per person by 5.4%. In comparison, China had around 8% growth in GDP per person, despite lower employment growth.

Around the world, the report finds that both advanced and emerging economies hit by the recession are firmly on the recovery path. “US productivity growth will be tempered briefly in 2011 as employment recovers from its major recession cutbacks but that’s termporary – the underlying productivity growth trend in the United States remains stronger than it is in Europe,” Bart van Ark, Chief Economist of The Conference Board.

In 2011, the forecast is that the jump in 2010 following the dip because of the recession will stabilise, but not yet return to the pre-recession standards. Another star performer was Turkey, which thanks to a smart recovery in GDP saw its productivity jumping, Brazil, which outperformed the Latin American sector, and a healthy recovery in Russia.