GCC's Leap for US$2.5 Trillion Economic Growth

The World Governments Summit, in collaboration with Strategy& Middle East, part of the PwC network, has released a report titled "In Search of Productivity: The Next US$50 Trillion in the Global Economy." The report introduces an approach to measuring productivity, incorporating dimensions crucial for the current age, such as environmental impact, health, innovation, and institutional quality.

The report's key findings reveal that GCC countries have the potential to boost their GDP growth from 3.8 percent to 5.4 percent over the next decade. This could result in an additional US$2.5 trillion added to the region's GDP. The research emphasises the importance of improvements in productivity performance, imposing the newly introduced Productivity Potential Index to identify and address the weakest determinant of productivity.

Productivity, a fundamental measure of economic performance, has traditionally focused on goods and services production compared to input requirements. However, the conventional measures have often overlooked critical aspects of the modern era, such as climate change, biodiversity loss, and social changes. The report introduces a forward-looking methodology that incorporates social capital, natural capital, and institutional quality alongside traditional measures like labor and human capital, physical capital, and innovation and intangible capital.

The Productivity Potential Index is a framework presented in the report, complemented by an online policy simulator. This tool allows users to assess how 25 countries compare across 19 criteria grouped into six categories. The index's estimated potential productivity answers the question of what a country's productivity could be, given its endowments, if utilised as effectively as the average country in the sample.

Chadi Moujaes, a partner with Strategy&, expressed optimism about the impact on the region's economic growth, stating, "The potential boost to GCC economic growth from a better understanding of the determinants of productivity is impressive."

Dima Sayess, partner and Ideation Center lead at Strategy&, highlighted the importance of sustainability in economic progress measurement, stating, "At a time when the world is looking to become more sustainable, it is essential to have appropriate tools for measuring economic progress."

The threefold benefits of adopting the Productivity Potential Index include identifying economic performance strengths and weaknesses, pinpointing factors that can significantly impact productivity and economic growth, and providing policymakers with actionable insights to bridge gaps and enhance performance.

The report underlines that the index's modern conception and calculations, utilising a machine-learning process, set it apart. It aligns with the Beyond GDP movement, supporting the Sustainable Development Goals and the 2030 Agenda.

As the Productivity Potential Index continues to expand, the report anticipates adding new countries in the coming months. The insights from this first edition underscore the significance of human and physical capital as primary productivity determinants, highlighting key differences across various economies and affirming the index's alignment with global sustainability goals.