Paul A. David is excellent here on the productivity puzzle.
If we learn the lessons of economic history, we should stop worrying about the productivity puzzle and just be patient. It takes decades for technological revolutions to feed through into a boom in productivity growth.
How will we know when this moment has arrived? It will be the digital revolution has reached full maturity. And how do you know when a technological revolution has matured? When its core component is built into a wide range of devices.
That moment came, eventually, with Watt’s separate condenser steam engine, and with the electric dynamo, and with the ICT revolution’s central component: the transistor. Thus, the computer revolution hadn’t truly arrived just because sales of computers were booming. It had arrived when other things started turning into computers – when almost everything we bought – watches, cars, cookers – contained transistors.
David also says, interestingly, that an impatience for productivity growth is nothing knew: we’ve been here before. Britain and America had a striking slowdown in productivity from 1890 – 1913, triggering concerns about productivity figures lagging the evident innovation that was now happening as a result of electric dynamos. As David paraphrases Solow, electric dynamos could be “everywhere except for in the productivity data.” It wasn’t until at least the 1920s that the boom finally came.