DP12294 Are Ideas Getting Harder to Find?
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.
