Commentary
In March 2019, we published an ominous special report, entitled: Why the global growth model is broken. In it, we explained a troubling phenomenon: productivity growth in the world economy had stalled in 2011 and started to decline.
We first noticed this in September 2017, and the situation has remained the same ever since. We named the period as the “Great Stagnation.”
A figure presenting the growth of total factor productivity (TFP) in the regions of the world from 1990 to 2021. (GnS Economics, Conference Board)
The total factor productivity, or TFP, presented in the figure above measures the share of GDP growth that cannot be accounted for by capital investment (in equipment and machinery) and the quantity and the improved quality of the labor force (skills and training). Effectively, TFP is the “unexplained” element of economic growth.
Solow Model of Economic Growth (1956) first suggested that one can find…
