Weak Overall Productivity Growth Hides Strong Growth in Advanced Industries

bryceplattBlog, Economics, MusingsLeave a Comment

If “advanced industries” are defined as the 50 most R&D- and STEM-worker intensive industries, there is a substantial differential, now exceeding 100%, between their productivity and that of “non-advanced industries”, as shown in the following graph:

industry-productivity-1
SOURCE: http://www.brookings.edu/blogs/the-avenue/posts/2016/07/21-productivity-gap-advanced-industries-muro

The compound annual growth rate (CAGR) during the past 25 years (1980-2015) has been 2.7% for “advanced industries”, compared to 1.0% for “non-advanced industries”.

QUESTIONS:
  • Given this evidence, is bringing back lost manufacturing jobs smart policy?
  • What policies help workers migrate to more productive “advanced industries”?
  • What policies can accelerate diffusion of innovation from “advanced industries” to lagging but nonetheless essential “non-advanced industries”?

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