WASHINGTON — Christine Lagarde, the managing director of the International Monetary Fund, said Monday that “more and better education” is crucial to combat sagging productivity in period of technological change.

Lagarde said that in “both in advanced and emerging economies, the slowdown of education attainment has lowered labor productivity growth by 0.3 percent points annually since 1990.” Lagarde was presenting a paper called, “Gone with the Headwinds: Global Productivity.”

Productivity growth is the key long-term driver of living standards, according to the report.

U.S. productivity, on a number of measures, has declined in recent years. Labor productivity has averaged annual growth of less than 1% for each of the last six years, compared to the 2.1% average since World War Two.

A slowdown in global trade also has negatively impact productivity. Lagarde cited research showing “that trade encourages firms to invest in new technologies and new business practices. It also encourages the sharing of new technology across borders…But the lack of global demand, and the gradual increase in trade restrictions, have led to a slowdown in trade growth,” she said.

Technology breakthroughs have changed the way people work and live, but have not changed the productivity statistics, the report said. Lagarde said it was wrong to be “leaning back waiting” for new technologies “to address the issue, to trigger the productivity that we are looking for.”

Nonetheless, more innovation is needed, not less, and it can take public investment and policy support, said Lagarde. “Governments should encourage entrepreneurial energy and spirit, remove barriers on competition, and cut red tape.”


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