Table 1 reports a decomposition of euro area and U.S. value added 8 growth for the market economy concept. 9 The key factor behind the increase in real output growth over the 1996-2004 period, compared to the years from 1980 to 1995, is in fact TFP growth.
In the 1980-1995 period, euro area annual TFP growth, at 0.4%, was not markedly below the 0.7% level in the U.S.. The gap became much larger in the 1996-2004 period, when euro area TFP growth increased only marginally to 0.5%, while U.S. TFP growth rose dramatically to 1.6%.