This article describes the contents and the construction of the EU KLEMS Growth and Productivity Accounts. This database contains industry-level measures of output, inputs and productivity for 25 European countries, Japan and the US for the period from 1970 onwards. The article considers the methodology employed in constructing the database and shows how it can be useful in comparing productivity trends. Although growth accounts are the organising principle, it is argued that the database is useful for a wider range of applications. We give some guidance to prudent use and indicate possible extensions. Copyright � The Author(s). Journal compilation � Royal Economic Society 2009.

Since the mid-1990s, labor productivity growth in Europe has significantly slowed compared to earlier decades. In contrast, labor productivity growth in the United States accelerated, so that a new productivity gap has opened up. This paper shows that this development is attributable to the slower emergence of the knowledge economy in Europe. We consider various explanations which are not mutually exclusive. These include lower growth contributions from investment in information and communication technology; the small share of information and communications technology-producing industries in Europe; and slower multifactor productivity growth, which proxies for advances in technology and innovation. Underlying these are issues related to the functioning of European labor markets and the high level of product market regulation in Europe. The paper emphasizes the key role of market service sectors in accounting for the productivity growth divergence between the two regions. We argue that improved productivity growth in Europe's market services will be needed to avoid a further widening of the productivity gap.

In this paper we present a new industry-level database to analyze sources of growth in four major European countries: France, Germany, Netherlands and the United Kingdom (EU-4), in comparison with the United States for the period 1979-2000. Aggregate labor productivity growth is decomposed into industry-level contributions of labor quality, ICT and non-ICT capital deepening and TFP. A small set of service industries is mainly responsible for the acceleration in ICT capital deepening in both regions, but their contribution to growth is lower in the EU-4 than in the U.S. TFP in these ICT-intensive services accelerated in the U.S. in the 1990s, but not in Europe. In addition, widespread deceleration in non-ICT capital deepening in the EU-4 has led to a European labor productivity slowdown. Copyright 2005 Blackwell Publishing Ltd.