Innovation and the Productivity Crisis

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Brookings Institution Press, Dec 1, 2011 - Business & Economics - 90 pages

The collapse of U.S. productivity growth since the late 1960s has been the most severe and persistent of recent economic problems. This volume reviews the extent of the growth slowdown, evaluates several contributing factors, and suggests strategies for improvement. The authors find that inflation, recessions, oil price fluctuations, and other economic disruptions in the 1970s had an averse effect on economic performance, but, they suggest, a slowing in the pace of innovation and a failure to exploit the benefits of innovation also contributed to the weakness in productivity.

Baily and Chakrabarti provide a comprehensive assessment of U.S. technology policy and its importance to growth. They argue for continued support of basic science, even though strength in this area does not give the U.S. economy an immediate competitive advantage, and advocate increased support for "middle ground" and commercial research. They conclude that this support must be structured to preserve the advantages of the market.

 

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Contents

The Productivity Crisis
1
The Slowdown in Other Countries
3
Productivity Growth by Industry
4
Computers and Productivity
7
Productivity and Competitiveness
8
Conclusions and Preview of the Book
10
Explanations of the Slowdown
13
Labor Quality and Effort
14
The Chemical and Textile Industries
59
Conclusions
66
Industry Studies Machine Tools and Electricity
67
Machine Tool Innovations
68
The Machine Tool Industry
71
Conclusions
84
Electronics and WhiteCollar Productivity
86
Three Empirical Studies
87

Capital Accumulation and Capital Services
18
Output Measurement and Mix
22
Management Failures
27
Government Regulatory and Demand Policies
29
Contributors to the Slowdown Except Innovation
33
RD and Innovation
34
Industry Studies Chemicals and Textiles
46
Innovation and Measured Productivity Change
47
Collecting the Innovation Data
52
Innovation Patterns in Chemicals and Textiles
54
Measured Social and Private Returns
90
A Model of the Effect of Electronics Innovation
92
Conclusions on WhiteCollar Productivity
102
Lessons from the Studies and Strategies for Growth
103
Technology and the US Slowdown
104
Why Were Technological Opportunities Missed?
106
Strategies for Spurring Growth
110
Conclusions on Strategies for Growth
130
Index
131
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About the author (2011)

Martin Neil Baily is the director of the Business Initiative at Brookings. He was chairman of the Council of Economic Advisers from 1999 to 2001. He is the author of Transforming the European Economy (Institute for International Economics, 2004).

Alok K. Chakrabarti is Associate Vice President for Research and William A. Mackie Professor of Commerce and Engineering at Drexel University.

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