Productivity and Innovation

Daniel Gallardo Albarrán, Robert Inklaar, 31 July 2020

Modern economic growth has improved the lives of millions in an unprecedented way, but its unequal progression across the globe has resulted in high income inequality. Most of the cross-country differences in income levels are typically attributed to differences in productivity rather than to physical or human capital accumulation. This column argues that this has not always been the case: physical capital accounted for a much larger fraction of income variation at the beginning of the 20th century. More generally, the results of the study call for a reevaluation of the long-term determinants of relative economic performance over time.

Jens Südekum, Joel Stiebale, Nicole Woessner, 30 July 2020

The claim in a 2016 report from The Economist that a small group of ‘superstar firms’ were “once again dominating the global economy'' referred mostly to American internet giants, but recent research suggests that previous decades were more broadly characterised by a reallocation of market shares towards highly productive and profitable firms, with notable implications for competition, market power, and the income distribution. This column argues that a superstar firm pattern is also present in European manufacturing, and that it is considerably stronger in manufacturing branches in which industrial robots have been on the rise. Technological change seems to be a key driver for the emergence of superstar firms.

Isaiah Hull, 23 July 2020

The COVID-19 pandemic has placed pressure on central banks and other public institutions to monitor the economy at a higher frequency than usual. However, much of the data and expertise needed to perform such monitoring is concentrated in the private sector and academia. This column describes the effort made by the Swedish Riksbank to alleviate this bottleneck by opening up a collaborative public channel through which academics and the private sector can directly contribute to the research in real time.

Arnoud Boot, Peter Hoffmann, Luc Laeven, Lev Ratnovski, 21 July 2020

Technological change in the financial industry is accelerating. Recent developments include new innovations and improvements on past trends. This column distinguishes between the information and communication channels of financial innovation and analyses their implications for financial intermediation. It suggests that innovations in these two dimensions may lead to big changes in the traditional bank business model. New policy priorities should focus on accurately assessing the operational risks and ensuring the robustness of these technologies.

Mai Dao, Mitali Das, Zsoka Koczan, 20 July 2020

The declining labour share of income is a global phenomenon that has affected primarily low-skilled and middle-skilled workers. This column examines the effects of trade and technology on the labour shares of different skill groups using a new dataset covering both advanced and developing economies. Both trade and technology have contributed to the declining labour share of middle-skilled workers but have had little effect on low-skilled and high-skilled labour. Policies should be designed with the goal of spreading the benefits of globalisation to the entire labour force.

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