Productivity is a catalyst of economic growth, and it underlies the development potential of nations. Boosting productivity creates employment, encourages innovation, and supports the sustainable and equitable development of societies. However, traditional measures of productivity do not include dimensions that we believe are critical for our age, such as environmental impact, health, innovation, and the performance of institutions. This report puts forward a new way of measuring productivity—and thus growth—that is not only robust but also green, equitable, and socially responsible. The Strategy& and the WGS Productivity Potential Index consists of 19 variables grouped into six pillars. To the inputs of labor and human capital, physical capital, and innovation and intangible capital that make up traditional measures of total factor productivity (TFP), we add pillars for social capital, natural capital, and institutions. About one-quarter of the Index is based on these additional pillars, while the remaining three-quarters cover the more traditional pillars. We have initially calculated the productivity performance of 25 countries using this new methodology.

The Index is modern not only in its conception but also in its calculations. With the help of a machine learning process, we estimated country-specific potential productivity using all the available data, across all countries and variables. This enabled us to identify those pillars that individual countries would specifically need to focus on if they wanted to boost their own productivity growth. An online simulator published with this report allows users to compare country performance across the key pillars and variables that constitute the Index and to assess the implications for productivity growth of improving critical productivity factors.

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