Technological Change and Economic Performance

By Albert N. Link; Donald S. Siegel | Go to book overview

7

The productivity slowdown

The issue in context

Productivity growth is a fundamental contributor to overall economic well-being. Because of this, the persistent slowdown in productivity growth that began in the mid-1960s in many industrialized countries, that increased in the early 1970s, and that lasted into the 1980s, caused considerable concern at that time and upon reflection even today. An understanding of the causes and correlates of the slowdown is important and fundamental to this volume for several reasons. First, it has historical economic significance, and for that alone it should remain in focus for those who study technological change and productivity growth. Second, the research at that time made important discoveries about the linkage between technological change and productivity growth, emphasizing the role of R&D activity. Third, the findings from that literature, which were reviewed completely in the 1987 monograph and selectively here, set the stage for much of the technology policy of OECD countries. Finally, fourth, as important as this productivity slowdown literature is to the evolution of the field, its limitations have brought about a provocative body of thought related to alternative sources of knowledge and their relationship to technological change - and that body of literature is discussed in detail in Chapter 8.

A critical question, and one that puzzled economists and policy makers at that time was: Why did productivity growth decline at that particular point in time? Was there a structural change such that traditionally measured productivity indices are biased? Had the work ethic of the labor force deteriorated during the 1960s? Was it by chance that the productivity slowdown appears to have coincided with the world energy crisis in 1973-4? Had the pool of potential productivity-enhancing innovations dried-up? Is the productivity slowdown part of a longer-run cycle? Or, is the measured slowdown nothing more than a statistical artifact?

The last of these questions is very important, especially given the measurement issues discussed in the previous chapters regarding production inputs and output. Was there really a slowdown? The data presented in Chapter 6, although highly aggregated, clearly indicate that the slowdown did occur and that it was globally pervasive. Writing at that time, Henrici (1981:123) asked: “Are we dealing with

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Technological Change and Economic Performance
Table of contents

Table of contents

  • Title Page v
  • Contents vii
  • Figures viii
  • Tables ix
  • Preface xi
  • Acknowledgments xii
  • 1 - Introduction 1
  • 2 - Some Preliminary Concepts 5
  • 3 - Early Theoretical and Empirical Studies of Economic Growth 13
  • 4 - The Production Function Concept of Technological Change 20
  • 5 - Alternative Frameworks for Measuring Technical Progress and Productivity 34
  • 6 - Trends in Productivity Growth 42
  • 7 - The Productivity Slowdown 49
  • 8 - Sources of Technical Knowledge 60
  • 9 - The Technology-Productivity Growth Relationship 70
  • 10 - Effects of Information Technology on Workers and Economic Performance 79
  • 11 - Research Partnerships and Economic Performance 98
  • Appendix A 121
  • Appendix B 124
  • Bibliography 126
  • Index 149
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