WGS, Strategy & Middle East unveil 2nd edition of Productivity Potential Index

The World Governments Summit (WGS) unveiled the second edition of the Productivity Potential Index (PPI), created in collaboration with Strategy& Middle East, part of the PwC network.

This latest edition builds on last year's launch by expanding its scope to include 60 countries, up from 25, offering an even more comprehensive look at what drives productivity in today's world.

With its innovative framework, the PPI redefines how productivity is measured, integrating dimensions critical for our age, such as environmental sustainability, well-being, innovation, and institutional quality.

The report estimates the untapped potential of Gulf Cooperation Council (GCC) economies, showing how improving their weakest productivity determinants could accelerate regional GDP growth from 3.5 percent to 6.0 percent, adding $2.8 trillion to the region's GDP over the next decade.

Overall, if all countries in the PPI sample were to improve their weakest productivity indicator to match that of the best-performing peers, it could boost the global economy by $87 trillion.

Regionally, Saudi Arabia leads among the GCC countries with the PPI score of $69.3 per hour worked, followed by Kuwait ($60.8), Qatar ($57.2), and Bahrain ($56.9). The UAE scored $48.7 per hour worked in the analysis.

Notably, Bahrain, Qatar, Saudi Arabia and the UAE rank among the global Top 10 in the 'physical capital' pillar, adding $22-24 per hour worked to their productivity potential.

Physical capital refers to reliable infrastructure, well-maintained equipment, and appropriately applied technologies that all contribute to better productivity.

GCC's success demonstrates how targeted policies and investments in manufacturing, logistics, and internet infrastructure can drive rapid growth across sectors.

Productivity has long been the engine of modern economies, influencing global competitiveness, quality of life, and long-term prosperity. Yet traditional measures often fall short, failing to capture the complexity of 21st-century challenges like climate change, biodiversity loss, social transformation, and aging populations. These outdated tools also look backward, analysing past performance rather than identifying future opportunities.

The Potential Productivity Index is a forward-looking, transformative tool that enables nations to understand their true productivity potential and pinpoint the drivers that can unlock it. The PPI expands traditional metrics—human capital, physical capital, and innovation—to include social capital, natural capital, and institutional quality, offering leaders a modern lens through which to tackle today's challenges.

Dima Sayess, partner at Strategy& Middle East and director of the Ideation Centre, emphasised the transformative potential of the findings: "Our analysis shows that non-traditional measures of productivity are shaping the direction of change regionally and globally. Social trust, the quality of institutions and environmental indicators all play a role in driving, or hindering, economic growth. Understanding these mechanisms can enable policymakers to develop effective and targeted solutions."

The PPI stands out as a cutting-edge tool for three key reasons: Pinpoints strengths and weaknesses: Countries can easily identify areas where they excel and where they lag; Focus on game changers: It highlights the most impactful levers for productivity and growth, using benchmarks from top-performing nations; Actionable Pathways: The Index offers policymakers a clear roadmap to close gaps, leapfrog performance, and reach the levels of the world's most productive economies.

Powered by a machine-learning model, the PPI combines advanced analytics with the latest academic insights on productivity. Its robustness has been rigorously tested by leading international economists, ensuring its credibility and relevance.

"The Productivity Potential Index offers policymakers critical insights and a practical tool to identify and focus on the areas with the greatest potential to boost productivity, and subsequently their economic growth," said Chadi Moujaes, partner with Strategy& Middle East.

The report revealed significant opportunities and trends: 'Beyond GDP' Alignment: The PPI aligns with the Beyond GDP movement, showcasing how growth and innovation increasingly intersect with decarbonisation and social cohesion. This makes the PPI an invaluable tool for driving progress toward the UN Sustainable Development Goals (SDGs) and the 2030 Agenda.

Secondly, Effective Governance Drives Productivity: Well-functioning institutions support thriving entrepreneurship and innovation ecosystems whilst ensuring efficient use of natural, human, and intellectual capital. Traditional measures of productivity often neglect the importance of institutional quality, which is why this new evidence is so critical for policymakers.

Finally, Spotlight on STEM: While human capital and physical capital are the foundational pillars for all countries when it comes to productivity, scientific research and new patents differentiate productivity potential "winners" from other economies. We expect this global shift towards knowledge-driven growth to continue.

This edition features an online policy simulator which allows users to compare the performance of 60 countries across 19 indicators. The tool provides actionable insights, answering the critical question: "What could a country's productivity look like if it fully optimised its resources and capabilities?"

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