Question

In: Economics

Why was productivity growth so high between 1990 and 2008? What has happened to the rate...

  1. Why was productivity growth so high between 1990 and 2008? What has happened to the rate of productivity growth since then?

Solutions

Expert Solution

Productivity rate was so high at that time because,nowdays It had been ccurred at a time of rapid technological change, increasing participation of firms and countries in global value chains (GVCs), and rising education levels in the labour force.

These facts, which seem to be contradictory, have led analysts to come to a variety of conclusions as to the root of the problem.Also, technological advances and management strategies that worked to propel productivity in the past have been fully implemented and are no longer contributing to productivity. Add to that a slowdown in capital investment after the financial crisis and one can expect that workers are no longer getting new technologies to make doing their jobs more efficient.

Along with that,some have speculated that people that are now returning to the labor market after the financial crisis are no longer feeling the pressure to increase their productivity for fear of losing their jobs.

With the increase in technology and in service sector, rate of productivity growth decreases.

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