The Future of Productivity Improving the Diffusion of Technology and Knowledge

Abstract

Productivity growth is the main driver of living standards. But productivity has slowed down over the past decade, starting already before the crisis. This paper shows that this is linked to a slowdown in the diffusion of global frontier innovations to other firms and difficulties in reallocating resources to the most productive firms. The paper also points to some key barriers to the diffusion of new innovations that prevent new knowledge and technology from flowing to less productive firms. Finally, it explores policy reforms that can help revive the diffusion machine and strengthen productivity growth.

Keywords: productivity; innovation; technological change

JEL Classification: D24, O33, O47