The World KLEMS Initiative generates industry-level data on outputs, inputs, and productivity. Productivity is output per unit of all inputs. The inputs consist of the primary factors of production—capital (K) and labor (L)—and the intermediate inputs: energy (E), materials (M), and services (S). Industry-level data are indispensable for analyzing the sources of economic growth. Productivity gaps between two countries are defined in terms of differences in productivity levels. These differences are measured by linking productivity levels for each country by purchasing power parities for outputs and inputs. The large productivity gap between the United States and Japan in 1955 gradually closed until 1995. Since then, Japanese productivity has been stagnant, while US productivity has continued to grow. The widening productivity gap can be traced to a small number of sectors, mainly in trade and services.
