Total factor productivity growth:we need a new drug

Creating the innovations that drive total factor productivity (TFP) growth takes both ideas and firms that process those ideas into new products or techniques. However, while economic theory and innovation policy focus upon idea supply alone, it is idea processing capability that drives US TFP growth. Kevin R. James, Akshay Kotak, and Dimitri Tsomocos write that understanding and improving the economy’s idea processing capability must be a core element of an effective growth strategy.