Between 1968 and 1980, the US economy experienced a slowdown in productivity growth. However, since the mid 1980s, economy has experienced increased in the growth rate in productivity. Can you give reasons why US productivity growth started to increase during the late 1980s and continued throughout the decade of the 1990s
The increase in US productivity growth during the late 1980s and throughout the 1990s can be attributed to several factors:
1. Technological advancements: The period from the late 1980s to the 1990s witnessed significant advancements in technology, such as the widespread adoption of personal computers, the internet, and digital communication. These innovations led to increased efficiency, automation, and information sharing, boosting productivity across various sectors.
2. Investment in research and development: Increased investment in research and development (R&D) by both private companies and the government played a crucial role in driving productivity growth. R&D efforts focused on developing new technologies and processes, enhancing product quality, and improving production methods, all of which contributed to increased productivity.
3. Globalization and trade liberalization: The 1990s saw an expansion of international trade and globalization. This integration of the global economy led to improved access to international markets, enhanced competition, and the transfer of knowledge and technology. These factors prompted firms to adopt more efficient production techniques and take advantage of economies of scale, resulting in higher productivity.
4. Management practices: During this time, there was an increased emphasis on adopting new management practices, such as Total Quality Management (TQM) and Lean Manufacturing. These practices aimed to improve operational efficiency, eliminate waste, and encourage continuous improvement. By implementing these management principles, firms were able to streamline their processes, cut costs, and boost productivity.
5. Demographic changes: The 1990s witnessed an influx of highly educated workers into the labor force. The baby boomer generation began to retire, making way for a younger workforce that was better educated and more technologically proficient. This demographic shift contributed to higher productivity levels as these workers brought new skills and knowledge to the job market.
It is important to note that these factors are interrelated, and their combined effects contributed to the overall increase in US productivity growth during this period.