We miss the obvious on productivity growth
Our continuing belief that the comparatively small percentage of the world’s population that is constituted by the West is the only relevant point for comparison can often obscure the obvious.
If we extend those comparisons to countries outside the West which are achieving significantly greater rates of productivity growth we might see causes more clearly . China is an example. Productivity growth in a relatively mature and advanced economy is intimately related to the percentage of GDP that is constituted by Capital Investment. The Western economies generally hover around 20 to 25 percent of GDP in recent years being in the form of capital investment. By contrast Investment in productive capital in China hovers around the early 40 percents.
The Western economies focus far more on consumption expenditures which do little for productivity growth. China continues to provide major incentives for capital expenditure in advanced industry and governmental focus on vast infrastructure projects which facilitate productivity growth and that is evident in the economic growth statistics and their higher rates of productivity growth.
The only way that the West can catch up with such countries in productivity growth is by doing the same.
Contributions to Pearls and Irritations
Your contribution will fund quality independent comment and analysis in Pearls and Irritations
Contribute
