Innovation pessimism_ Has the ideas machine broken down_ _ The Economist

Emergingmark ets s tillmanagefas tgrowthands

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Unformatted text preview: be to T he Economist's free e­mail newsletters and alerts. F o llo w T h e Eco n o mist o n T witter Subscribe to T he Economist's latest article postings on T witter F o llo w T h e Eco n o mist o n F aceb o o k See a selection of T he Economist's articles, events, topical videos and debates on F acebook. it inc ludes things lik e better laws and regulations as well as tec hnic al adv anc e—and meas ure it us ing a tec hnique c alled “growth ac c ounting”. In this ac c ounting, “tec hnology ” is the bit left ov er after c alc ulating the effec t on GDP of things lik e labour, c apital and educ ation. And at the moment, in the ric h world, it look s lik e there is les s of it about. Emerging mark ets s till manage fas t growth, and s hould be able to do s o for s ome time, bec aus e they are c atc hing up with tec hnologies already us ed els ewhere. Theric h world has no s uc h engine to pull it along, and it s hows . This is hardly unus ual. For mos t of human his tory , growth in output and ov erall ec onomic welfare has been s low and halting. Ov er the pas t two c enturies , firs t in Britain, Europe and Americ a, then els ewhere, it took off. In the 19th c entury growth in output per pers on—a us eful general meas ure of an ec onomy ’s produc tiv ity , and a good guide to growth in inc omes —ac c elerated s teadily in Britain. By 1906 it was more than 1% a y ear. By the middle of the 20th c entury , real output per pers on in Americ a was growing at a s c orc hing 2.5% a y ear, a pac e at whic h produc tiv ity and inc omes double onc e a generation (s ee c hart 2). More than a c entury of inc reas ingly powerful and s ophis tic ated mac hines were obv ious ly a part of that s tory , as was the ris ing amount of fos s il­fuel energy av ailable to driv e them. But in the 1970s Americ a’s growth in real output per pers on dropped from its pos t­s ec ond­ world­war peak of ov er 3% a y ear to jus t ov er 2% a y ear. In the 2000s it tumbled below 1%. Output per work er per hour s hows a s imilar pattern, ac c ording to Robert Gordon, an ec onomis t at Northwes tern Univ ers ity : it is pretty good for mos t of the 20th c entury , then s lumps in the...
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