Tag Archives: Economic growth

Technology and the future of growth: Challenges of change

By Zia Qureshi – Economic growth has been lackluster for more than a decade now. This has occurred at a time when economies have faced much unfolding change. What are the forces of change, how are they affecting the growth dynamics, and what are the implications for policy? A recently published book, “Growth in a Time of Change,” addresses these questions.

Three basic ingredients drive economic growth—productivity, capital, and labor. All three are facing new challenges in a changing context. Foremost among the drivers of change has been technology, spearheaded by digital transformation.

Productivity is the main long-term propeller of economic growth. Technology-enabled innovation is the major spur to productivity growth. Yet, paradoxically, productivity growth has slowed as digital technologies have boomed. Among advanced economies over the past 15 years or so, it has averaged less than half of the pace of the previous 15 years. Firms at the technological frontier have reaped major productivity gains, but the impact on productivity more widely across firms has been weak. The new technologies have tended to produce winners-take-most outcomes. Dominant firms have acquired more market power, market structures have become less competitive, and business dynamism has declined.

Investment also has been weak in most major economies. The persistent weakness of investment despite historically low interest rates has prompted concerns about the risk of “secular stagnation.” Weak productivity growth and investment have reinforced each other and are linked by similar shifts in market structures and dynamics.

Technology is having profound effects on labor markets. Automation and digital advances are shifting labor demand away from routine low- to middle-level skills to higher-level and more sophisticated analytical, technical, and managerial skills. On the supply side, however, equipping workers with skills that complement the new technologies has lagged, hindering the broader diffusion of innovation within economies. Education and training have been losing the race with technology. more>

Recovery is Not Resolution

By Carmen Reinhart – A few days ago, Greece, the most battered of Europe’s crisis countries, was able to tap global financial markets for the first time in years. With a yield of more than 4.6%, Greece’s bonds were enthusiastically snapped up by institutional investors.

Do recent positive developments in the advanced countries, which were at the epicenter of the global financial crisis of 2008, mean that the brutal aftermath of that crisis is finally over?

Good news notwithstanding, declaring victory at this stage (even a decade later) appears premature. Recovery is not the same as resolution.

It may be instructive to recall that in other protracted post-crisis episodes, including the Great Depression of the 1930s, economic recovery without resolution of the fundamental problems of excessive leverage and weak banks usually proved shallow and difficult to sustain.

During the “lost decade” of the Latin American debt crisis in the 1980s, Brazil and Mexico had a significant and promising growth pickup in 1984-1985 – before serious problems in the banking sector, an unresolved external debt overhang, and several ill-advised domestic policy initiatives cut those recoveries short. more> https://goo.gl/oQBpm1

Is The Creative Economy Also In Trouble?

By Steve Denning – The first Industrial Revolution was that of steam and railroads from 1750 to 1830.

The second Industrial Revolution was that of electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum which went from 1870 to 1900.

The third Industrial Revolution was that of computers, the web, mobile phones went from 1960 to present.

Economic growth thus gradually accelerated after 1750, reached a peak in the middle of the 20th century, and has been slowing down since. His (Robert Gordon) thesis is that the economy is moving back to the “normal” state that it was in from 1300 to 1750, namely, zero growth. more> http://tinyurl.com/kzjj5kt

Do We Really Need Economic Growth?

By Marcin Gerwin, Richard Heinberg – The aim is to encourage people to consume every year more goods and services so that the Gross Domestic Product continues to grow. Do you think it’s a realistic approach?

Ultimately, economic growth can’t be maintained in any country simply because it implies increased extraction and use of resources. After all, we live on a finite planet.

The no-growth economy was the norm, historically, up until the 19th and 20th centuries; in fact it was the expected condition of economies throughout most of the human history. more> http://tinyurl.com/q9jkyw9

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An unstable global economic system that is being ignored

BOOK REVIEW

The Age of Oversupply: Overcoming the Greatest Challenge to the Global Economy, Author: Daniel Alpert.

By Daniel Alpert – Present-day economic imbalances €” particularly those stemming from the rapid emergence of the post-socialist nations over the past 15 years, with their associated supply of excess labor, productive capacity and global capital, relative to demand €” have hamstrung the economies of the advanced nations. Such economic dislocation can no longer be resolved by any one power, or even by two or three.

Indeed, there is enormous risk today of unilateral or bilateral actions being viewed by players left out of such actions as economically threatening or even hostile, leading to economic countermeasures. The issue is compounded by the complexity of the relationships among and between developed nations on the one hand and emerging ones on the other. more> http://tinyurl.com/p727l5l

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The Role of Capital Has Politicians Confused

English: DOE EA Capital Planning and Investmen...

English: DOE EA Capital Planning and Investment Control (Photo credit: Wikipedia)

By Mark Spitznagel – Amid all of this messy thinking we miss the simple truth behind our material wealth: It has been achieved through the accumulation, by us and inherited from our forefathers, of a stock of highly configured and embedded tools that make human effort more effective and things possible that never were before. And we turn our backs on this truth when we turn more and more of these tools over to government bureaucrats.

Profits are but an intermediate end of capital investment. Its ultimate end, in fact, is the material progression of our civilization. more> http://tinyurl.com/aemha5t

Fundamental Economic Requirements For Our Next President

By Charles R. Schwab – The answer to that question is a simple test: can they ignite economic growth?

Economic growth is the only ingredient that will help pull the country out of its present funk and allow us to solve our pressing issues.

Growth is not complicated. It is a force of nature. But when it stalls, as it has for the last four years, it will not return without effective leadership. A great leader understands and applies the power of incentives to encourage growth. Incentives appeal to a basic human instinct and motivate productive choices. They are used throughout our lives from grades in school that encourage learning and higher performance, to the incentives we use at work through pay, bonuses and promotions to recognize and encourage accomplishment. Incentives are the most powerful tool a government and its leaders have to spur economic growth. more> http://tinyurl.com/97zw5yd

The Growth Recession Of 2012 And The Presidential Election

By Charles Kadlec – The U.S. economy has slipped into a growth recession.

The economic consequence will be either higher unemployment, a further decline in the labor force participation rate, or a combination of the two. The political consequence will be increased scrutiny of each Presidential candidate’s economic program during the debates and through the final days of the campaign. more> http://tinyurl.com/8s6ljyz

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CONGRESS WATCH November Unemployment Rate Falls to 8.6 Percent, Susanna Kim, ABC News HOUSE COMMITTEE: Planning for the Death Tax: Can Small Businesses Survive? Subcommittee on Economic Growth, Tax and Capital Access/US Congress Ellmers: Need A Job? Support Small Businesses, … Continue reading