Slump in growth

The decline in TFP growth is not limited to the advanced countries. TFP growth has been falling in the People’s Republic of China. It is negative in Brazil and Mexico. It was barely positive in India in 2014. It has declined and is near zero in a number of relatively poor countries that are still far from middle-income status.

TFP growth fell in Sub-Saharan Africa from 1999-2006 to 2007-2012 and again in 2013-14. It fell in Russia, Central Asia, Southeastern Europe and Latin America as a whole. This is one of the most disturbing and, no doubt, important phenomena affecting the world economy. The question is what lies behind it and whether it might be reversed. While it may be possible to get some purchase by comparing and contrasting the extent of the TFP growth slowdown in different countries in recent years, this approach has limitations. It is not possible to distinguish the importance of global and country-specific factors...