Measuring Productivity in the Context of Technological Change
Technological change is making it harder to interpret disappointing productivity figures in many economies. Although there are likely to be many contributory factors, such as post-financial crisis debt overhang and demographic change, technological change complicates the interpretation of the evidence in two ways. One is the delay between companies adopting new technologies and their impact on productivity because of the organizational or management changes and the complementary investments that are also needed. The other is the mismatch between how official GDP and productivity figures are defined and the character of the digital economy, such as zero price, advertising-funded services, or the switch to cloud computing. A more fundamental question is whether “productivity” is a useful concept in economies consisting to such a large extent of services and intangibles.