In case you missed it on Wednesday, Andrew Smithers’ letter to the FT offers a delightfully simple explanation to the productivity puzzle that continues to baffle the world.
It’s all because of a lack of investment.
Or, as Smithers puts it:
Sir, Productivity is not, as you claim, “the puzzle that baffles the world’s economies” (editorial, May 30). It is caused by low investment, which is essential to make technology effective. Productivity is not lower in China than in the US because good technology is unknown but because the capital stock is much lower. Equally US productivity does not reflect the use of the best technology. The average company is less productive than the best and cannot catch up without more investment.