DP12294 Are Ideas Getting Harder to Find?

Author(s): Nicholas Bloom, Charles I Jones, John Van Reenen, Michael Webb
Publication Date: September 2017
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Programme Areas: Macroeconomics and Growth
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12294

In many growth models, economic growth arises from people creating ideas, and the long-run growth rate is the product of two terms: the effective number of researchers and their research productivity. We present a wide range of evidence from various industries, products, and firms showing that research effort is rising substantially while research productivity is declining sharply. A good example is Moore's Law. The number of researchers required today to achieve the famous doubling every two years of the density of computer chips is more than 18 times larger than the number required in the early 1970s. Across a broad range of case studies at various levels of (dis)aggregation, we find that ideas-and in particular the exponential growth they imply - are getting harder and harder to find. Exponential growth results from the large increases in research effort that offset its declining productivity.