Standardisation: boosting productivity and trade

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A new macroeconomic report was carried out in the Nordics and the Netherlands. It shows us the remarkable impact of standardisation on Nordic economies. The report finds that 25% of labour productivity growth in the past decades is associated with increased standardisation and 9% of total export growth. 

Export growth

The report reveals that from 1995 to 2019, standards are associated with around 9% of the total growth in exports.

Continuing standardization at the current rate could yield roughly 2 billion euros annually in the Nordics and the Netherlands combined. To break it down, that's 2 billion DKK in Denmark, 2.1 billion NOK in Norway, 3.5 billion SEK in Sweden, 132 million EUR in Finland, 1.6 billion ISK in Iceland, and 1 billion EUR in the Netherlands.

Increased exports generate employment, enhance productivity, and finance imports, fostering more trade. It does not only expand the availability of goods and services but also lowers prices. It's a key driver of development and poverty reduction. 

Labour productivity growth

From 1970 to 2019, standardisation contributed to a 25% increase in labour productivity in the Nordics and the Netherlands, allowing each employee to generate more than double the output compared to fifty years ago.

A quarter of this growth in labour productivity is directly associated with standards. If this pace continues, it's estimated to contribute an annual GDP increase of 2.6 billion euros or 100 euros per employee in these regions.

But how do standards achieve a boost in productivity and economic growth? Here are some key mechanisms:

• Interoperability:  Standards simplify and streamline interactions between products, systems, and organizations. Establishing consensus eliminates the need for multiple processes, resulting in a unified and efficient value chain.

• Quality Assurance:  Standards establish specific requirements and technical specifications. They promote best practices and ensure consistent quality. This reduces the need for additional quality controls and minimises the risk of failure.

• Competition:  Standards level the playing field, providing affordable access to state-of-the-art technical information. They reduce the variety of intermediate goods, disseminate technical knowledge cost-effectively, and build trust in new entrants.

• Innovation:  Standards provide a common platform for companies and organizations to build upon, reducing the need for reinventing existing knowledge. Developing standards itself fosters innovation by bringing together experts and encouraging market-driven solutions.

• Market Access:  Standards drive international trade by enhancing compatibility, reducing transaction costs, and serving as a quality signal.

Standardisation is not just about economic benefits but it also serves other critical purposes like health, safety, consumer protection and environmental protection. This report underscores the important economic benefits of standardisation.

The role of standards in driving productivity, trade, and prosperity is undeniable. 

This report🡭 was commissioned as a joint initiative by the six standardisation bodies: Swedish Institute for Standards (SIS), Danish Standards (DN), Standards Norway (SN), Finnish Standards Association (SFS), Icelandic Standards (IST), and the Netherlands Standardisation Institute (NEN).