Strategies for Productivity Growth
Economic growth in developed nations relies on solving the productivity puzzle: How do we increase the amount of economic output produced for every hour of labour? In practice, labour productivity is calculated as gross domestic product divided by aggregate hours worked. Economy-wide productivity gains often rely on technological innovation, which can straddle various categories, including product versus process, radical versus incremental, and disruptive versus sustaining. This technical note considers four of the most popular strategies to drive productivity growth: intellectual property protection; geographic clusters; investments in science, technology, engineering, and mathematics; and fostering an entrepreneurial spirit.