<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The growth of total factor productivity (TFP) in advanced economies has slowed significantly after the 1970s. The global financial crisis (GFC) has resulted in the second productivity growth slowdown. This paper, on the basis of a broad literature review, identifies the structural forces and legacies of the financial crisis, explaining the productivity growth slowdown and providing possible policy solutions. The mismeasurement hypothesis is also discussed. The slowing pace of innovations, population aging, slowing human capital accumulation, limits of structural transformation, capital misallocation, and firm-level factors are identified as structural forces slowing TFP growth. Lack of capital deepening, financial frictions, and slowdown of international trade are the most important legacies of GFC affecting productivity growth.</p></abstract>

The growth of total factor productivity (TFP) in advanced economies has slowed significantly after the 1970s. The global financial crisis (GFC) has resulted in the second productivity growth slowdown. This paper, on the basis of a broad literature review, identifies the structural forces and legacies of the financial crisis, explaining the productivity growth slowdown and providing possible policy solutions. The mismeasurement hypothesis is also discussed. The slowing pace of innovations, population aging, slowing human capital accumulation, limits of structural transformation, capital misallocation, and firm-level factors are identified as structural forces slowing TFP growth. Lack of capital deepening, financial frictions, and slowdown of international trade are the most important legacies of GFC affecting productivity growth.

The productivity growth slowdown in advanced economies: causes and policy recommendations

International Journal of Management and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

The growth of total factor productivity (TFP) in advanced economies has slowed significantly after the 1970s. The global financial crisis (GFC) has resulted in...

The productivity growth slowdown in advanced economies: causes and policy recommendations

Article Category: Conceptual Paper

Published Online: Dec 31, 2019

Page range: 391 - 406

Received: Oct 22, 2018

Accepted: Apr 24, 2019

DOI: https://doi.org/10.2478/ijme-2019-0020

Keywords
macroeconomics, productivity, TFP, productivity growth slowdown

© 2019 Marcin Wroński, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Figure 1

Figure 2

The productivity growth slowdown in advanced economies: causes and policy recommendations

Article Category: Conceptual Paper

Published Online: Dec 31, 2019

Page range: 391 - 406

Received: Oct 22, 2018

Accepted: Apr 24, 2019

DOI: https://doi.org/10.2478/ijme-2019-0020

Keywordsmacroeconomics, productivity, TFP, productivity growth slowdown

© 2019 Marcin Wroński, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Figure 1

Figure 2

Keywords
macroeconomics, productivity, TFP, productivity growth slowdown