Are pro-productivity policies effective?

This paper examines the role of public policies in shaping cross-country productivity performance over the period 2003–2018 based on a comprehensive framework that maps more than one hundred policy indicators into the five broad policy channels identified by van Ark et al. (2024). Using data for up to 21 advanced economies and 14 industries, the paper combines principal component analysis with a sector-level empirical model that exploits cross-industry differences in exposure to national policies. The results show that, while structural and historical factors explain most of the productivity differences, policy settings are strongly and systematically associated with productivity outcomes. Institutional quality, human capabilities, competitive and flexible markets, public R&D expenditure, environmental policies, and trade openness display robust positive correlations with labour and total factor productivity. The analysis highlights substantial heterogeneity in policy mixes across countries and rejects a one-size-fits-all approach to productivity policy reform. Scenario simulations suggest that convergence toward international best practices could yield sizeable productivity gains, especially for lagging and “muddling through” economies. While the estimates are descriptive rather than causal, the framework provides a coherent basis for identifying country-specific productivity policy priorities.