We have seen that there are significant gaps in the productivity levels between economies. These gaps developed qualitatively, and then quantitatively, as capitalism took off and more and more of the world was dragged into its orbit. This produced the “great divergence” or “divergence big time”. The gap between the most productive and least productive economies in the world economy has continued to grow.

Between the extremes, states compete to catch up or minimize the threat of falling back. The economies that have closed the gap are sometimes grouped into “convergence clubs”. Talk of “clubs” implies that there is some commonality, some membership criteria, but critics quickly pointed out that economies were being grouped together once they had grown or failed to grow. They were clubs “after the event” not “before it”.

The catching-up process of productivity growth certainly involves some common elements. But it has taken place, and is taking place, in a dynamic global economy so the possibilities and constraints have also varied over time and place. Moses Abramovitz argued that an economy not only needs the capability to catch up, it needs the opportunity (Abramovitz 1986). In this chapter we will focus on economies at the top of the global productivity hierarchy, their past productivity growth and some aspects of the current debates about their productivity performance.

Britain and the United States: the leaders of the gang?

In the last two centuries two economies have dominated any global productivity race: Britain and the United States. Britain's dominance lasted until the late nineteenth century, but since then the US has set, and continues to set, the global productivity benchmarks.

Britain's early productivity lead was bound up with it being “the first industrial nation”. However, the underlying productivity story is rather different from that often suggested. Table 5.1 shows some very long-run data for the British economy. These estimates look more precise than they really are, but we can use them to make some important points about the emergence of Britain's early productivity lead.

Note first the contrast between the rate of productivity growth before 1700 and that which came after, which is further evidence of the productivity shift that occurred with industrialization. Notice too that labour productivity growth after 1700 picked up in all sectors.