A Siemens train -- Siemens is Germany's and Europe's biggest industrial group.

The German Ifo Economics Institute says that after a continuous decline in German productivity in recent years, a slight increase was observed for the first time in 2005. However, this improvement did not mark a change in the German trend growth since 1992. The increasing productivity deficit vis-à-vis the US, which is more than 1.5 percentage points, on average, remains problematic. As the reason the Ifo researchers point to the differing intensities and use of IT investments.

The Ifo productivity database shows very clearly that IT investments of German IT producing industries were far below that of the US in the 1990s. These IT investments caused a second increase in productivity in the US, but this did not occur in Germany. Of particular interest are the contributions of individual industry branches to technological change (TFP). Here the deficit vis-à-vis the US becomes even greater.

"We must not forget that the growth of productivity is the basis for a long-term improvement in the standard of living", economists Theo Eicher and Thomas Strobel point out.

With the Ifo productivity database, German productivity growth can be examined in detail and the gap especially to the US can be explained. The Ifo productivity database contains the currently most well-grounded German IT investment time series. It offers the possibility of examining capital services at the industry branch level, particularly the important software, computer and information investments.

The Ifo productivity database has been constructed by the Ifo Institute in collaboration with ifo research professor Theo Eicher (professor at the University of Washington, Seattle).

Link to database: http://faculty.washington.edu/ te/growthaccounting/