People have many theories behind the global productivity slowdown; this article puts forth 3 key theories behind this occurrence.
First, there is the claim by Robert Gordon that today’s innovations do not compare in scale or impact with the breakthroughs of the 1990s let alone the wave of earlier transformations bringing urban sanitation, electricity, the telephone, television and commercial flight: “so it’s the lack of really profound economy-wide impacting innovation in the past few years that’s been the problem.”
Second, evidence suggests that productivity growth is still very strong, possibly stronger than ever, but confined to “frontier firms”. These tend to be younger, more innovative and profitable. They also vastly outperform the laggards, whose poor performance brings down the average. Here the productivity slowdown is thought to be due not to lack of innovation, but rather to a lack of diffusion from the frontier to the rest of the economy.
Finally, there is the view that whether or not there has been a transformation of productivity performance as a result of technological change, it may not be reflected in the statistics due to measurement shortcomings. For example, the role of the internet in changing the way we communicate, assemble data and deliver services is simply not captured by traditional measures.
I would suggest reading the actual article as well, as it brings up some great points and nuances to these theories. There are arguments that innovation and technology are wiping out jobs, but history gives support to the argument that innovation creates jobs. We should be focusing on education and job training for the future. What are your theories behind the productivity slowdown? Do you agree with the possibilities this article proposes? I would love to hear different perspectives.
