Why growth harder to find: good ideas aren't becoming rare, but hard to share
A new NBER paper argues that economic growth is slowing not because good ideas are becoming rarer, but because they are increasingly difficult to share and diffuse across the economy. The research suggests that barriers to knowledge transfer, rather than a depletion of innovation, are the primary constraint on sustained growth.
Background
- This NBER working paper argues that economic growth has slowed not because we're running out of good ideas, but because ideas are becoming harder to transfer across people, firms, and countries. The bottleneck has shifted from idea *generation* to idea *diffusion*.
- The paper builds on the influential "ideas are getting harder to find" thesis (Bloom et al. 2020), which showed that R&D productivity is declining — more researchers are needed today to produce the same rate of economic growth as in the past.
- The authors distinguish between two stages: the frontier of new ideas (still expanding) and the adoption of those ideas across the economy (slowing down). They argue the second stage is the main drag on growth today.
- This matters because policy implications differ sharply: if ideas are genuinely harder to find, the answer is more R&D spending; if they are harder to share, the answer is improving diffusion through better education, regulation, competition, and technology transfer mechanisms.