How Productive?

In West and China, productivity is falling, threatening growth. India simply can't afford the same problem

Soon after China's communist party celebrated its centenary last year, an IMF assessment of the country's economy acted as a downer. An economy that transformed itself through an almost four-decade run of double-digit growth had run out of steam. It wasn't a shortfall in investment; the return on investment had collapsed. China's problem with productivity is not unique. It's perhaps today the world's most serious long-term threat of economic stagnation and social turmoil. Productivity is the measure of the output that can be extracted from a combination of inputs. Increasing this measure is the most important durable source of economic growth.