Average percentage growth 6  6 Trading partners Mainland Norway  5  5  4  4  3  3  2  2  1  1 0  0 1950−59 1960−69 1970−79 1980−89 1990−99 2000−09 2010−17 Sources: The Conference Board Total Economy Database™ (Original version) November 2017, Norwegian Technical Calculation Committee for Wage Settlements, Statistics Norway and Norges Bank  Productivity growth may be lagging because the diffusion of new technology into goods and services production takes time. Productivity growth will only increase once the use of information technology and digital solutions reduces the use of labour. Behind the average figures we also find an interesting pattern. In many sectors, the gap between the most productive firms and the rest has increased (Chart 5).5 The chart shows the gap within the service sector, but the same picture applies to other sectors. 5 Andrews, D., C. Criscuolo and P. N. Gal (2015): “Frontier firms, technology diffusion and public policy: micro evidence from OECD”, OECD Productivity Working Paper No. 2. 5  While productivity growth for frontier firms has remained robust, it has been substantially weaker in the rest of the economy. This may indicate that it is not the rate of innovation that has slowed, but rather the diffusion of new technology from frontier firms to laggard firms. Chart 5 Productivity for frontier firms and other firms. Services.1) OECD countries. Index.
This reflected a steadily falling male employment rate, the lowest female employment rate in the EU, a declining rate among older workers and the lowest average exit age in the EU of workers from the labour market. Apart from such supply-side considerations, there are other factors which may hinder the ability of the economy to generate sustainable growth. For instance, despite the widespread recognition that exports should be the engine of growth in a small open economy like Malta’s, insufficient attention has been devoted to the fact that between 2005 and 2008 GDP growth was largely driven by domestic demand. The average level of combined private and public consumption was around 85% of GDP during this period, against 78% in the EU. Consumption at this level cannot be sustained unless substantially more resources are allocated to investment and to other growth-enhancing activities. At this point it is necessary to extend the analysis to two important dimensions of membership of a monetary union, namely the role of price and cost competitiveness and fiscal policy. Persistently faster increases in prices and costs in Malta relative to the euro area average lead inevitably to a loss of competitiveness. Since the interest rate and exchange rate policy tools are not available to euro area members, the necessary adjustments have to take place through domestic price and wage levels or in real variables such as output and employment. It is, therefore, important to avoid any such divergencies.