We are seeing continued progress in technological innovation, yet anemic productivity growth. A big reason is that public and private investment have fallen in the last decade. It’s time for serious pro-investment policies.
So why have we not seen the strong productivity growth we need? As explained in the recent ITIF e-book Think Like an Enterprise: Why Nations Need Comprehensive Productivity Strategies, there is solid research suggesting that the slowdown is not a cyclical phenomenon, nor is it because we are measuring output incorrectly. Rather, a key factor appears to be the slow growth of, or in some cases, an outright decline in both private and public investment. Indeed, there is a strong consensus among economists about the importance of investment to productivity. But the trends in the United States are troubling, to say the least.