Some have said that productivity growth is slow today because most of the truly important inventions happened years ago, and today’s technological progress is more incremental. But I think a more natural place to look is at international trade, because companies that use trade to increase specialization also increase their productivity.
And if that process has reached a natural limit, at least for now, then perhaps that also limits future productivity gains. A quick comparison of experiences in the United States and Canada illustrates my point. Let’s look at US and Canadian manufacturing over the past 60 years. In 1955, roughly onethird of the workforce in both countries was employed in manufacturing.