Regarding innovation or technology creation, we know there is a lively debate among economists about how much new technologies can add to productivity growth going forward (“technooptimists vs “techno-pessimists”). But for now we do not observe a major slowdown in innovation: productivity growth in global frontier firms remains robust.
And the performance of euro area firms at the frontier has been broadly comparable with that of other advanced economies in manufacturing in recent years. Where the euro area is lagging behind is in services, where frontier firms are less than half as productive as their global peers.