ABSTRACT
The new framework for productivity measurement reveals that replication of established technologies explains by far the largest proportion of US economic growth. Replication takes place through the augmentation of the labor force and the accumulation of capital. International productivity comparisons reveal similar patterns for the world economy, its major regions, and leading industrialized, developing, and emerging economies. Studies are now underway to extend these comparisons to the countries included in the World KLEMS Initiative. Innovation is indicated by productivity growth and accounts for a relatively modest portion of US economic growth. Innovation is far more challenging than replication of established technologies and subject to much greater risk. The diffusion of successful innovation requires substantial financial commitments. These fund the investments that replace outdated products and processes, and establish new organization structures, systems, and business models. Although innovation accounts for a modest portion of economic growth, this is vital for maintaining gains in the US standard of living in the long run. Industry-level production accounts are now prepared on a regular basis by national statistical agencies in Australia, Canada, Denmark, Finland, Italy, Mexico, The Netherlands, Sweden, and the United Kingdom, as well as the United States. These accounts provide current information about the growth of outputs, inputs, and productivity at the industry level and can be used in international comparisons of patterns of structural change like those presented by Jorgenson and Timmer (2011). The World KLEMS Initiative has made it possible to extend these comparisons to countries around the world, including important emerging and transition economies.
