Five Puzzles in the Behavior of Productivity, Investment, and Innovation
Abstract(1) Whatever happened to the cyclical effect? Skeptics were justified on the basis of data through the end of 1999 in their claim that part of the post-1995 productivity growth revival reflected the normal cyclical correlation between productivity and output growth. In contrast data through mid-2003 reveal only a negligible cyclical effect for 1995-99 but rather a temporary bubble in 2002-03. (2) Why did productivity growth accelerate after 2000 when the ICT investment boom was collapsing? The most persuasive argument points to unusually savage corporate cost-cutting and hidden intangible investments in the late 1990s that provided productivity benefits after 2000. (3) The steady decline in the price of computer power implies steady technical progress, but then why did computers produce so little productivity growth before 1995 and so much afterwards? We draw an analogy to electricity, where miniaturization was the key step in making small electric motors practicable, and the internal combustion engine, where complementary investments, especially roads, were necessary to reap benefits. (4) What does the collapse of the investment boom imply about the future of innovation? First-rate inventions in the 1990s, notably the web and user-friendly business productivity software, are being followed by second-rate inventions in the current decade. (5) Finally, why did productivity growth slow down in Europe but accelerate in the U. S.? A consensus is emerging that U. S. institutions foster creative destruction and financial markets that welcome innovation, while Europe remains under the control of corporatist institutions that dampen competition and inhibit new entry. Further, Europe lacks a youth culture like that of the U. S. which fosters independence: U. S. teenagers work after school and college students must work to pay for much of their educational expense. There is a chasm of values across the Atlantic.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10660.
Date of creation: Aug 2004
Date of revision:
Publication status: published as Lopez-Claros, Augusto and Xavier Sala-i-Martin (eds.) The Global Competitiveness Report 2003-04. New York and Oxford: Oxford University Press, 2004.
Note: EFG PR
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Gordon, Robert J, 2004. "Five Puzzles in the Behaviour of Productivity, Investment and Innovation," CEPR Discussion Papers 4414, C.E.P.R. Discussion Papers.
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-31 (All new papers)
- NEP-EFF-2004-10-21 (Efficiency & Productivity)
- NEP-ENT-2004-08-31 (Entrepreneurship)
- NEP-INO-2004-08-31 (Innovation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- C.J. Krizan & John Haltiwanger & Lucia Foster, 2002.
"The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade,"
02-18, Center for Economic Studies, U.S. Census Bureau.
- Lucia Foster & John Haltiwanger & C.J. Krizan, 2002. "The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade," NBER Working Papers 9120, National Bureau of Economic Research, Inc.
- Paul A. David & Gavin Wright, 2005.
"Early Twentieth Century Productivity Growth Dynamics: An Inquiry into the Economic History of “Our Ignorance”,"
- Paul David & Gavin Wright, 1999. "Early Twentieth Century Productivity Growth Dynamics: An Inquiry into the Economic History of Our Ignorance," Economics Series Working Papers 1999-W33, University of Oxford, Department of Economics.
- Paul A. David & Gavin Wright, 1999. "Early Twentieth Century Productivity Growth Dynamics: An Inquiry into the Economic History of "Our Ignorance"," Oxford University Economic and Social History Series _033, Economics Group, Nuffield College, University of Oxford.
- repec:hal:wpaper:halshs-00289168 is not listed on IDEAS
- repec:hal:cepnwp:halshs-00289168 is not listed on IDEAS
- Dostie, Benoit & Trépanier, Mathieu, 2005.
"Returns to Computer Use and Organizational Practices of the Firm,"
IZA Discussion Papers
1541, Institute for the Study of Labor (IZA).
- Benoit Dostie & Mathieu Trépanier, 2004. "Return to Computer Use and Organizational Practices of the firm," Cahiers de recherche 04-06, HEC Montréal, Institut d'économie appliquée.
- Bas Jacobs & Jules Theeuwes, 2005. "Innovation in the Netherlands: the Market Falters and the Government Fails," De Economist, Springer, vol. 153(1), pages 107-124, December.
- Andrea Bonaccorsi & Lucia Piscitello & Cristina Rossi, 2005. "Explaining The Territorial Adoption Of New Technologies - A Spatial Econometric Approach," ERSA conference papers ersa05p92, European Regional Science Association.
- Shahid Yusuf & Kaoru Nabeshima & Shoichi Yamashita, 2008. "Growing Industrial Clusters in Asia : Serendipity and Science," World Bank Publications, The World Bank, number 6429, October.
- Raquel Ortega-Argilés & Mariacristina Piva & Marco Vivarelli, 2012.
"The transatlantic productivity gap: Is R&D the main culprit?,"
DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali
dises1284, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
- Raquel Ortega-Argilés & Mariacristina Piva & Marco Vivarelli, 2011. "The Transatlantic Productivity Gap: Is R&D the Main Culprit?," IREA Working Papers 201103, University of Barcelona, Research Institute of Applied Economics, revised Mar 2011.
- Ortega-Argilés, Raquel & Piva, Mariacristina & Vivarelli, Marco, 2011. "The Transatlantic Productivity Gap: Is R&D the Main Culprit?," IZA Discussion Papers 5586, Institute for the Study of Labor (IZA).
- Jochen Hartwig, 2005.
"Messprobleme bei der Ermittlung des Wachstums der Arbeitsproduktivität – dargestellt anhand eines Vergleichs der Schweiz mit den USA,"
KOF Working papers
05-100, KOF Swiss Economic Institute, ETH Zurich.
- Jochen Hartwig, 2006. "Messprobleme bei der Ermittlung des Wachstums der Arbeitsproduktivitaet - dargestellt anhand eines Vergleichs der Schweiz mit den USA," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(4), pages 418-435, July.
- Rochelle M. Edge & Thomas Laubach & John C. Williams, 2004.
"Learning and shifts in long-run productivity growth,"
Working Paper Series
2004-04, Federal Reserve Bank of San Francisco.
- Edge, Rochelle M. & Laubach, Thomas & Williams, John C., 2007. "Learning and shifts in long-run productivity growth," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2421-2438, November.
- Rochelle M. Edge & Thomas Laubach & John C. Williams, 2004. "Learning and shifts in long-run productivity growth," Finance and Economics Discussion Series 2004-21, Board of Governors of the Federal Reserve System (U.S.).
- Jinghai Zheng & Angang Hu & Arne Bigsten, 2009. "Potential output in a rapidly developing economy: the case of China and a comparison with the United States and the European Union," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 317-342.
- Harold Creusen & BjÃ¶rn Vroomen & Henry van der Wiel & Fred Kuypers, 2006. "Dutch retail trade on the rise? Relation between competition, innovation and productivity," CPB Document 137, CPB Netherlands Bureau for Economic Policy Analysis.
- Raquel Ortega-Argilés, 2012. "The Transatlantic Productivity Gap: A Survey Of The Main Causes," Journal of Economic Surveys, Wiley Blackwell, vol. 26(3), pages 395-419, 07.
- Chellaraj, Gnanaraj & Maskus, Keith E. & Mattoo, Aaditya, 2005. "The contribution of skilled immigration and international graduate students to U.S. innovation," Policy Research Working Paper Series 3588, The World Bank.
- Mattalia, Claudio, 2013. "Embodied technological change and technological revolution: Which sectors matter?," Journal of Macroeconomics, Elsevier, vol. 37(C), pages 249-264.
- Jerzmanowski, Michal & Nabar, Malhar, 2008. "The welfare consequences of irrational exuberance: Stock market booms, research investment, and productivity," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 111-133, March.
- Alessandro Rebucci & Nicoletta Batini & Pietro Cova & Massimiliano Pisani, 2009.
IMF Working Papers
09/63, International Monetary Fund.
- Theodore M. Mitrakos & Georgios Th Simigiannis & Panagiota G. Tzamourani, 2005. "Indebtedness of Greek households: evidence from a survey," Economic Bulletin, Bank of Greece, Economic Research Department, issue 25, pages 13-35, AUgust.
If references are entirely missing, you can add them using this form.