Regarding innovation Jones argues that their contribution can either be driven by the impact of new ideas and processes on total factor productivity (“ideas TFP”) or the research effort pushing new ideas (such as the number of researchers employed). Gordon (2016), for example, suggested for the US that ideas with the same productivity benefits are harder to discover today than in history.
Jones – in joint work with Bloom, Van Reenen and Webb (2017) – finds that this is a rather general phenomenon across different sectors and products, detecting significant reductions in “ideas TFP”. Over many decades, however, this was compensated by overproportionate increases in research effort.