Should We Be Worried About Productivity Trends?

Author(s): Michael Spence

Date: Jul 4, 2017

Theme(s): Finance & Macroeconomics

Publications: Opinions & Speeches

Advisory Board Co-Chair Michael Spence and Sandile Hlatshwayo propose the viewing of productivity growth in a new light.

Economists concern themselves not only with addressing difficult questions thoughtfully, but also with formulating the questions themselves. Sometimes, rethinking those questions can hold the key to finding the answers we need.

Consider the productivity debate. Economists trying to explain the apparent structural slowdown in productivity growth have been asking the following question: Where is the missing increase? Their response covers concerns about measurement, structural shifts in the labor market, a potential paucity of investment opportunities, productivity-diluting technological innovations, and technology-driven skills mismatches.

But it may also be useful to consider a more fundamental question: How much productivity growth do we really want, and at what cost?

This article first appeared in Project Syndicate on June 29, 2017. The views expressed in the reports featured are the author’s own and do not necessarily reflect Asia Global Institute’s editorial policy.