Stay up-to-date with complimentary updates
Just subscribe to the US economy myFT Digest — delivered straight to your email inbox.
Boosting economic growth is a pressing question for the new(ish) British government of Sir Keir Starmer, as well as its European and American counterparts. Historically, economists have pointed to increased productivity through research and development as the key driver of growth. Politicians often advocate for more R&D funding in hopes of spurring economic progress.
However, a recent report from the IMF’s Finance and Development publication challenges this notion. Ufuk Akcigit, a University of Chicago economist, analyzed US productivity trends and uncovered a paradox. Despite a significant increase in R&D spending over the years, economic growth has not accelerated as expected.
Michael Peters, a Yale economist, highlighted the concerning trend of declining labor productivity in recent years, attributing it to a shift in the landscape of innovation. Incumbent companies are now using R&D to solidify their market dominance rather than fostering new challengers.
This trend towards corporate concentration has raised questions about the effectiveness of current R&D strategies and the impact on future innovation. While some argue that large tech companies drive economic growth and innovation, others caution against the risks associated with concentrated corporate power.
As debates around corporate concentration and innovation continue, it is crucial for policymakers to address key issues such as R&D tax credits, patent protection, antitrust enforcement, and corporate influence in politics. Ignoring these vital policy discussions in favor of sensational news stories undermines the future trajectory of the economy.
Amidst the ongoing debates, the role of tech leaders like Elon Musk in shaping the innovation landscape remains a topic of interest. Whether their influence represents entrepreneurial spirit or corporate consolidation will have significant implications for the future of innovation, particularly in the AI race.
gillian.tett@ft.com
following sentence in your own words:
The cat chased the mouse through the house.