The Idea Multiplier: An Innovation in Predicting Productivity
18 Pages Posted: 7 Nov 2020
Date Written: September 18, 2020
The persistent downturn in productivity growth during the past two decades has cast doubts on global economic prospects. Frequently cited causes include a dearth of productivity-enhancing ideas, an aging population, and a shift to service-based economies. While we acknowledge the role each of these has played, our research shows that productivity is fundamentally driven by a virtuous cycle of idea generation, diffusion, and proliferation of ideas, which has recently accelerated after years of stagnation.
In this paper, we take a step back from the traditional approach of leveraging patents as a proxy for intellectual/technical advancement and focus instead on the sharing of ideas. We introduce what we have termed the “Idea Multiplier” and the “Idea Diffusion” metrics, time series of academic paper citations within and across industries (Idea Multiplier) and countries (Idea Diffusion) based on nearly 2 billion records of journal citations. We find that greater idea sharing has tended to lead to periods of stronger productivity growth, and given that each metric has been increasing in recent years, that the recent era of low productivity growth will eventually end.
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