Intangible Capital, TFP Growth and Green Shoots in New Productivity Data

This article undertakes a comparative analysis of recent productivity growth in European economies, Japan, the United Kingdom, and the United States using the EU KLEMS & INTANProd database. The influence of intangible capital on productivity growth and insights from combining long historical time series for TFP with the current estimates in EU KLEMS & INTANProd are central features of our analysis. Our compara- tive analysis of growth decompositions before and after the productivity slowdown suggests that productivity growth in the 2014-2019 period in advanced economies has been relatively strong, consistent with a slew of the newer digital technologies (cloud, big data, AI) gaining wider use. Recent research finds that mechanisms governing knowledge diffusion are weaker recently than in the past—implying that advanced economies are not experiencing their full potential for productivity growth. Unless policies or voluntary industry actions create new platforms for technology extension and data sharing (e.g., open banking policies), the potential for spillovers to amplify intangible-investment induced innovations will be less strong than they have been in the past.