Raising productivity growth is the holy grail of economic
policy. Improving productivity – or the efficiency of
production – is the surest way of improving human
welfare.
The application of new technologies and the reorganisation of
work and markets are two of the great engines of productivity
growth.
Such innovations have, in the last century, collapsed the cost
of living and brought what were once luxuries within the reach of
all households.
One way of gauging these effects is to look at the proportion of
consumer spending accounted for by expenditure of different goods
and services.
Innovation has transformed productivity in agriculture and
manufacturing. Productivity in agriculture has been revolutionised
by mechanisation, new plant varieties, selective breeding, improved
husbandry and the use of fertilisers and pesticides. Along with the
growing international trade, consumers enjoy a dizzying array of
foodstuffs at ever lower prices.
