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The Future of Productivity

image of The Future of Productivity

This book addresses the rising productivity gap between the global frontier and other firms, and identifies a number of structural impediments constraining business start-ups, knowledge diffusion and resource allocation (such as barriers to up-scaling and relatively high rates of skill mismatch).

Analysis based on micro and industry-level data highlights the importance of reallocation-friendly policies, including well-functioning product, labour and risk capital markets, efficient judicial systems, bankruptcy laws that do not excessively penalise failure, housing policies that do not unduly restrict labour mobility, and improvements in public funding and organisation of basic research which do not excessively favour applied vs basic research and incumbents vs young firms.

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The role of public policy

This chapter first discusses the potential for policy to promote growth at the global productivity frontier, and then turns to the links between policies and other aspects of productivity performance. In this regard, the second section discusses the role of innovation policies, while the third and fourth sections show that well-designed framework policies can create the conditions for productive firms to thrive and underpin the diffusion of knowledge from the frontier and for societies to allocate skills more efficiently. The latter also requires policy-makers to cast a wider net, such as addressing the potentially adverse effects of housing policies on skill mismatch.

English

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