Just as robotics and digital platforms are reshaping the global economy, developing East Asia’s productivity growth is slowing. The timing is puzzling. A region that built its growth miracle on technology adoption and integration into global value chains has so far, apart from perhaps China, failed to translate robots, digital platforms and advanced technologies into productivity gains.
The productivity slowdown is not uniform, and understanding its origins is essential to reversing it. Research drawing on newly harmonised firm-level data across both manufacturing and business services sectors from developing East Asian economies — including Indonesia, Malaysia, the Philippines and Vietnam — helps explain why the region is losing productivity momentum. China, where the productivity story is more complex and data is available only until 2007, is also examined in the research.
In OECD economies, the slowdown reflects a widening gap between the top-performing ‘global frontier’ firms and the rest. Developing East Asia tells a different story. Here, the national frontier firms that should be driving growth — the most productive 10 per cent in each sector — appear to be stagnating relative to the best 10 per cent in that sector globally.
