"Game Changers” to Boost Productivity and Economic Growth
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In his book The Great Stagnation economist Tyler Cowen wondered if recent weak economic recoveries and languid levels of job creation are because we’re in a innovation and productivity rut. If that's the case, what can be done to crank up economy?
While not directly tackling Cowen’s question, a presentation at the American Economics Association annual meeting by Martin Neil Baily and James L. Manyika of the Brookings Institution and McKinsey Global Institute respectively, concludes that the future of American productivity is “very uncertain” but suggest some “Game Changers” to boost productivity. Most have a strong policy component:
- Energy: The U.S. has a global strategic advantage in producing shale oil and natural gas that offers opportunities for manufacturing in the U.S. and exporting liquefied natural gas.
- Workforce development: “Increasing K-12 and post-secondary attainment and achievement, aligning skills to job demand, and providing re-employment pathways”
- Infrastructure: Make investments to preserve and improve it.
- Business creation: Reverse the “23% drop in new business creation since 2007.”
- Trade: Improve export growth (now at 13% of GDP) in goods services.
At the current pace of job creation it will take over a decade to return to pre-recession job levels. As Fareed Zakaria wrote last week, we need to focus on economic growth. Policies to increase productivity and economic growth could do this.
[H/T James Pethokoukis]