Upcoming productivity growth MIT Technology Review

The last 15 years have been rough times for many Americans, but today they are encouraging signs of a turnaround.

Productivity growth, a key driver of higher living standards, averaged just 1.3% since 2006, less than half the rate of the previous decade. But on June 3, the U.S. Bureau of Labor Statistics reported U.S. labor productivity It increased by 5.4% In the first quarter of 2021. What is better? There are reasons that this is not a trivial one, but one that heralds better times in the future: an increase in productivity that will match or exceed the boom of the 90s.

Our optimism is based on research showing that most OECD countries are surpassing the lowest point productivity curve J. Driven by advances in digital technologies, such as artificial intelligence, productivity growth is advancing.

The productivity J curve describes the historical pattern of slow productivity growth at the beginning after the introduction of technological progress, and a few years later a sharp take-off took place. Our research and others have shown that technology alone is rarely used to create great benefits. Instead, investments in technology must be combined with larger investments in new business processes, skills, and other types of intangible capital before advances that are as diverse as steam engines or computers ultimately increase productivity. For example, after electricity entered American plants, productivity remained stagnant for more than two decades. Productivity Using distributed machinery, using a technique that allows electricity, reinvented production lines, increased productivity.

There are three reasons this time for the productivity J curve to be larger and faster than in the past.

The first is technological: the last decade has seen an astonishing set of technological advances. The most important are in AI: the development of algorithms for machine learning with a sharp decline in data storage prices and improvements in computing power have allowed companies to meet the challenges of predicting and diagnosing visually and speech. The fast-growing cloud computing market has made these innovations available to small businesses.