Accounting for UK economic performance 1973-2009

Economic performance in the UK improved over 1997 and 2007 in comparison to other OECD countries. We employ growth accounting and crossÐcountry regression analysis to identify factors behind this relative improvement in performance. Based on growth accounting analysis, we find out that, capital deepening and skills improvements, as well as financial services constitute a small part of the improvement in hourly productivity performance. The majority of the improvement comes from factors affecting the level of technology and the efficiency of factor use. Our results from regression analysis, support this conclusion and suggest that improvements in efficiency from increased openness and foreign direct investment are the most important components behind productivity change.