Ideas Aren't Getting Harder to Find

4 days ago

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Productivity growth in advanced economies has been slowing down for fifty years, impacting economic growth and income levels.
The popular explanation for this slowdown is that we're running out of good ideas, making innovation harder to achieve.
Research by Nicholas Bloom and colleagues suggests that while productivity growth remains steady, the number of researchers has increased significantly, implying each researcher contributes less.
Alternative evidence from Teresa Fort and colleagues indicates that idea production, measured by patents, hasn't declined, suggesting the issue lies in market inefficiencies rather than a lack of innovation.
Market inefficiencies, such as declining allocative efficiency, prevent more productive firms from gaining market share, hindering overall productivity growth.
The focus should shift from increasing research output to improving market mechanisms that translate innovations into economic gains.

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