The news report highlights a paradox in the midst of the technological revolution – while there have been significant technological advancements, productivity growth in many Western nations, including the UK and the US, has slowed down considerably.
One possible explanation for this phenomenon is that people might be using technology to engage in non-work activities, such as social media, entertainment, and internet browsing, rather than using it to boost their productivity.
However, economists suggest two main factors that could account for the slow productivity growth. First, it is possible that the impact of technology is not being measured accurately. For instance, companies may outsource IT services to cloud-based providers, leading to more efficient operations but making the companies appear smaller in terms of economic growth.
Second, economic revolutions, including technological revolutions, tend to be gradual and slow-burning. The full benefits of technological advancements may take decades to materialize fully.
Dame Diane Coyle, an expert on productivity measurement, argues that current statistics might not capture the true impact of technology on the economy. Data collection methods may still be based on old models, failing to account for the changing ways businesses operate in the digital age.
The report also references the 19th-century industrial revolution, where most data was focused on the older agricultural sector rather than the transformative industries that were changing the economic landscape.
Nick Crafts, an economic history professor, draws parallels between the current technological revolution and the historical example of the steam engine. The significant changes brought about by the steam engine took decades to manifest fully, suggesting that the impact of the current technological revolution might similarly unfold over time.
Overall, the slow productivity growth amid a technological revolution presents an intriguing challenge for economists and policymakers in understanding and harnessing the full potential of technological advancements for economic growth and prosperity.