The Challenge of Total Factor Productivity

In this article, as part of the symposium on total factor productivity, Erwin Diewert of the University of British Columbia provides a comprehensive discussion of what is needed to develop reliable measures of total factor productivity in terms of output and the different classes of inputs. He concludes that the current system of industry statistics in all advanced countries has not kept up with the evolution of the economy from primary and manufacturing production to the production of services and that if we want accurate measures of total factor productivity at the industry level, statistical agencies must be given additional resources.