There’s a point raised in Is Scientific Progress Slowing Down by Tyler Cowen and Ben Southwood about problems relating to using TFP as an estimate of the value of progress, which is that it is hard to categorize ideas which are adopted late. Duplicating one of the quotes in the comments there:
To consider a simple example, imagine that an American company is inefficient, and then a management consultant comes along and teaches that company better personnel management practices, thereby boosting productivity. Does this count as an improvement in TFP or not? Or is it simply an increase in labor supply, namely that of the consultant? On one hand, some hitherto-neglected idea is introduced into the production process. That might militate in favor of counting it as TFP. On the other hand, the introduced idea is not a new one, and arguably the business firm in question is simply engaged in “catch up” economic growth, relative to more technologically sophisticated firms.
Generalizing a bit, this seems like it could introduce counting problems everywhere. For example, after WWII half of Eurasia had to be rebuilt; does this count as catch-up growth? What about the industrialization of other countries, whether via deliberate economic development strategies or outsourcing—these factories weren’t built with state-of-the-art techniques, but rather because the same old technology was cheaper to build and operate there.
How closely does this global boom in catch-up growth coincide with our 1970s stagnation timeline, and can a part of the explanation be something as simple as capital being redirected from technical progress to expansion of the current technical base?
This analysis, and the stagnation debate in general, is really about the technological frontier. Global development overall has not necessarily been stagnating—India and China have seen huge growth in the last 50 years.
I wonder about the question of catch-up growth.
There’s a point raised in Is Scientific Progress Slowing Down by Tyler Cowen and Ben Southwood about problems relating to using TFP as an estimate of the value of progress, which is that it is hard to categorize ideas which are adopted late. Duplicating one of the quotes in the comments there:
Generalizing a bit, this seems like it could introduce counting problems everywhere. For example, after WWII half of Eurasia had to be rebuilt; does this count as catch-up growth? What about the industrialization of other countries, whether via deliberate economic development strategies or outsourcing—these factories weren’t built with state-of-the-art techniques, but rather because the same old technology was cheaper to build and operate there.
How closely does this global boom in catch-up growth coincide with our 1970s stagnation timeline, and can a part of the explanation be something as simple as capital being redirected from technical progress to expansion of the current technical base?
This analysis, and the stagnation debate in general, is really about the technological frontier. Global development overall has not necessarily been stagnating—India and China have seen huge growth in the last 50 years.