The Productivity Paradox: it's real and it's time to face it

Washington

OVER the last decade or so, productivity growth has slowed considerably in most major developed economies, even as impressive advances have been made in areas like computing, mobile telephony and robotics.

All these advances should have ostensibly boosted productivity; yet, in the United States, a world leader in technological innovation, business-sector labour productivity growth between 2004 and 2014 averaged less than half the rate of the previous decade.

What is going on?

One theory that has gained traction lately is that the so-called "Productivity Paradox" does not actually exist.

The logic goes that productivity growth only seems to be dropping because the statistics we use to measure it fail to capture fully recent gains, especially that achieved from using new and higher-quality information and communication technology (ICT). If prices do not reflect quality impr…