What is the future of productivity?

Productivity has been slowing in advanced economies for several decades, and today’s potential productivity increases are among the lowest seen in more than a century, except in times of war. A drop in Europe compared to the United States, which has intensified post-pandemic, adds to this overall slowdown. With the start of a massive spread of artificial intelligence (AI), its effects on productivity increase hopes for a new industrial revolution, despite current macro estimates appearing disappointing.

The recent slowdown results from long-lasting yet transitory factors linked to the financial crisis and the delay in deploying new technologies. However, particularly in the context of the clash between the COVID-19 crisis and rising energy prices, a recovery in productivity cannot be achieved without policies that facilitate the reallocation of production factors, the effective adoption of AI-related technologies, and the energy transition. Reform by European institutions appears essential to encourage companies to take more risks and implement critical measures, particularly in the digital sector.

If productivity does not accelerate in the next decade, major challenges will be posed to fund significant issues such as climate transition, population ageing, and financial deleveraging. It will then be difficult to respond to expectations for improvements in purchasing power, of which productivity improvements remain the only source of sustainable financing in the medium term.