The Problem With Innovation

As far back as the industrial revolution, major innovations have traveled swiftly from company to company and industry to industry, an economy-boosting phenomenon called diffusion.

Today, there is mounting evidence this engine of growth seems to be misfiring, a phenomenon some economists say helps explain the slowdown in productivity growth bedeviling developed economies.

Productivity, usually measured as output per hour or per worker, refers to the efficiency with which goods and services are produced in an economy. Boosting productivity—raising the amount of goods and services produced by each worker—is one of the most important long-term drivers of rising living standards.

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