Advanced Search
MyIDEAS: Login to save this paper or follow this series

Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds

Contents:

Author Info

  • Robert J. Gordon

Abstract

This paper raises basic questions about the process of economic growth. It questions the assumption, nearly universal since Solow’s seminal contributions of the 1950s, that economic growth is a continuous process that will persist forever. There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely. Rather, the paper suggests that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history. The paper is only about the United States and views the future from 2007 while pretending that the financial crisis did not happen. Its point of departure is growth in per-capita real GDP in the frontier country since 1300, the U.K. until 1906 and the U.S. afterwards. Growth in this frontier gradually accelerated after 1750, reached a peak in the middle of the 20th century, and has been slowing down since. The paper is about “how much further could the frontier growth rate decline?” The analysis links periods of slow and rapid growth to the timing of the three industrial revolutions (IR’s), that is, IR #1 (steam, railroads) from 1750 to 1830; IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and IR #3 (computers, the web, mobile phones) from 1960 to present. It provides evidence that IR #2 was more important than the others and was largely responsible for 80 years of relatively rapid productivity growth between 1890 and 1972. Once the spin-off inventions from IR #2 (airplanes, air conditioning, interstate highways) had run their course, productivity growth during 1972-96 was much slower than before. In contrast, IR #3 created only a short-lived growth revival between 1996 and 2004. Many of the original and spin-off inventions of IR #2 could happen only once – urbanization, transportation speed, the freedom of females from the drudgery of carrying tons of water per year, and the role of central heating and air conditioning in achieving a year-round constant temperature. Even if innovation were to continue into the future at the rate of the two decades before 2007, the U.S. faces six headwinds that are in the process of dragging long-term growth to half or less of the 1.9 percent annual rate experienced between 1860 and 2007. These include demography, education, inequality, globalization, energy/environment, and the overhang of consumer and government debt. A provocative “exercise in subtraction” suggests that future growth in consumption per capita for the bottom 99 percent of the income distribution could fall below 0.5 percent per year for an extended period of decades.

Download Info

If 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.
File URL: http://www.nber.org/papers/w18315.pdf
Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18315.

as in new window
Length:
Date of creation: Aug 2012
Date of revision:
Handle: RePEc:nbr:nberwo:18315

Note: DAE EFG PR
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Kremer, Michael, 1993. "Population Growth and Technological Change: One Million B.C. to 1990," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 681-716, August.
  2. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
  3. Daron Acemoglu & David Autor, 2012. "What Does Human Capital Do? A Review of Goldin and Katz's The Race between Education and Technology," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 426-63, June.
  4. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, July.
  5. Broadberry, Stephen; Campbell, Bruce; Klein, Alexander; Overton, Mark; Van Leeuwen, Bas., 2010. "English Economic Growth: 1270 - 1870," CAGE Online Working Paper Series 35, Competitive Advantage in the Global Economy (CAGE).
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The lives of our grandchildren
    by Johan Fourie in Johan Fourie's Blog on 2012-10-26 12:56:04
  2. Le mythe de la croissance infinie et le crépuscule de l'homo oeconomicus
    by contact@captaineconomics.fr (Le Captain') in Captain Economics on 2012-12-04 09:29:09
  3. Robert Gordon on Economic Growth
    by David Stern in Stochastic Trend on 2012-12-29 07:36:00
  4. L’avenir de la croissance américaine
    by ? in D'un champ l'autre on 2014-01-25 13:03:00
  5. Robert Gordon et la fin de la croissance américaine
    by ? in D'un champ l'autre on 2014-02-20 15:38:00
  6. Is Robert Gordon Right about U.S. Growth?
    by dvollrath in The Growth Economics Blog on 2014-05-20 21:14:15
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Stephen D. Oliner & Daniel E. Sichel & David M. Byrne, 2013. "Is the information technology revolution over?," Working Papers 37301, American Enterprise Institute.
  2. Didier Sornette & Peter Cauwels, 2014. "1980–2008: The Illusion of the Perpetual Money Machine and What It Bodes for the Future," Risks, MDPI, Open Access Journal, vol. 2(2), pages 103-131, April.
  3. Robert J. Gordon, 2014. "The Demise of U.S. Economic Growth: Restatement, Rebuttal, and Reflections," NBER Working Papers 19895, National Bureau of Economic Research, Inc.
  4. John Foster, 2013. "Energy, Knowledge and Economic Growth," Papers on Economics and Evolution 2013-01, Philipps University Marburg, Department of Geography.
  5. Sadaf Bashir & Bert Sadowski, 2014. "General Purpose Technologies: A Survey, a Critique and Future Research Directions," Working Papers 14-02, Eindhoven Center for Innovation Studies, revised Feb 2014.
  6. Eggertsson, Thráinn, 2013. "Quick guide to New Institutional Economics," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 1-5.
  7. Olivér KOVÁCS, 2013. "Black swans or creeping normalcy? – An attempt to a holistic crisis analysis," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4, pages 127-143, June.
  8. Christine Carmody, 2013. "Slowing Productivity Growth - A developed economy," Economic Roundup, Treasury, Australian Government, issue 2, pages 57-78, December.
  9. Mattoo, Aaditya & Subramanian, Arvind, 2013. "Criss-crossing migration," Policy Research Working Paper Series 6539, The World Bank.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:18315. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.