Factors determining productivity growth Clearly, a key question for economic forecasters, and even more so for U.S. citizens, and indeed for the entire global economy, is whether we should anticipate a return of the more rapid productivity gains experienced in the IT boom and for the quarter century after the end of World War II, or should instead resign ourselves to tepid economic growth in future years.
And a central policy issue is whether government policies can help push the economy toward a higherproductivity regime. In this context, it is useful to think of labor productivity growth as coming from three sources, as shown in figure 2. First, greater investment by firms in tangible equipment and structures, as well as “intangible” investments such as software and product designs, raise labor productivity.