Summary of Gone with the Headwinds

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Increases in total factor productivity (TFP) drove the engine of worldwide economic gains for decades. But since the 2008 global financial crisis, TFP declines have been responsible for a major share of the output slowdown in both the developed and developing economies. Professionals at the International Monetary Fund focus on the crisis-fanned “headwinds” that have hindered productivity growth. In this scholarly dive into the nuances of productivity, the team analyzes the shortfall and its causes, implications and potential mitigations. getAbstract recommends this erudite report to economists, executives and policy experts.

In this summary, you will learn

  • Why global productivity growth is anemic,
  • What factors are causing the slack and
  • How policy makers can boost productivity.
 

About the Authors

Gustavo Adler et al. are economists and researchers at the International Monetary Fund.

 

Summary

For decades prior to the global financial crisis, productivity growth – measured by total factor productivity (TFP) – had catalyzed economic expansion and increased worldwide income and wealth gains. However, since the 2008 implosion, TFP has precipitously declined. Experts point to the slowing of technology gains as one possible culprit. However, new innovations such as artificial intelligence could kick-start this dynamic. Officials also blame graying populations and the pullback in global trade growth. Yet the 2008 economic collapse and subsequent years of uncertainty may be just as significant. Specifically, lack of business capital injections created an “adverse feedback loop between weak and low-risk investment, TFP, and potential growth.”

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