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The macroeconomic benefits of standardisation

Menon has analysed the macroeconomic benefits of standardisation in Norway, Sweden, Denmark, Finland, Iceland and the Netherlands. Building on previous research and new analyses, we find that standardisation contributes to productivity growth through five mechanisms:

  1. Standards increase interoperability by simplifying and streamlining interactions between products, systems, and organisations. By establishing a consensus among stakeholders, it eliminates the need for multiple processes, resulting in a unified and efficient value chain.
  2. Standards improve quality assurance by establishing specific requirements and technical specifications for products, services, and processes. Standards promote best practices, ensure consistent quality, and facilitate validation, thus reducing the need for additional quality controls and minimising the risk of failure.
  3. Standards increase competition by levelling the playing field. Standards provide affordable access to state-of-the-art technical information. They reduce the variety of intermediate goods, cost-effectively disseminate technical knowledge, and build trust in new entrants.
  4. Standards increase innovation by providing a common platform for companies and organisations to build upon, reducing the need for reinventing existing knowledge. Developing standards itself also fosters innovation by bringing together experts and encouraging market-driven solutions.
  5. Standards provide market access and thus drive international trade by enhancing compatibility, reducing transaction costs, and serving as a quality signal.

By utilising a model of economic growth, it is possible to estimate how much of the growth in labour productivity can be attributed to standardisation. To estimate the relation between standards and exports, we have employed a gravity model of trade. The results indicate that 25 % of productivity growth and 9 % of export growth in the past five decades is associated with standardisation. If standardisation work continues at the same pace as the past decade, this amounts to approximately €2.6 billion in productivity growth, and €2 billion in exports annually for the Nordics and the Netherlands combined.

The report was commissioned by six European standardisation bodies: Swedish Institute for Standards (SIS), Danish Standards (DS), Standards Norway (SN), Finnish Standards Association (SFS), Icelandic Standards (IST), and the Netherlands Standardisation Institute (NEN).

Standards Norway has prepared a summary of the findings and a Q&A, which can be found here.

The report can be read in its entirety here.

Contact person for this study is: Øyvind Vennerød.

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