IGC Evidence Paper - Firms, trade, and productivity

This paper reviews the role of firm-level productivity in driving sustainable economic growth, particularly in low- and middle-income countries. It emphasises the importance of total factor productivity and its direct and indirect impacts on economic development. The review explores how climate change and environmental degradation pose risks to productivity while highlighting the need for resilient firms and innovative practices to sustain growth. Key areas of focus include the adoption of technology, improvement of management practices, and the reduction of market distortions. Given that productivity growth stems from numerous micro-level changes, including the reduction of critical distortions, it reviews existing evidence on these transformations and highlights priorities for future research.