Globalization and decades of trade liberalization have led to increased interlinkages between national economies. Consequently, local producers are now more exposed to foreign competitors, requiring them and the industrial systems within which they operate to possess a certain level of competitiveness. In turn, competitiveness depends to a large extent on firms’ level of productivity. Simultaneously, global economic integration, at least in theory, has made it easier to access foreign markets.

This tool focuses on providing a methodology analysing national industrial and manufacturing capacity as well as performance, primarily in the form of productivity growth. It explores the contribution of structural change to labour productivity and how sources of labour productivity growth can be measured. It also discusses how the sources of differences in levels of labour productivity across countries can be measured.

This tool provides methodologies for analysing a country’s future potential for growth in manufacturing value added. By using the measures presented here, analysts can gain insights into the magnitude and strength of the country’s industrial system. Ultimately, this analysis will inform the discussion on the implications for industrial policy.