GII 2022 explores the future of innovation-driven growth

What is the relationship between innovation and productivity?

Traditionally, innovation has been the key to improving levels of productivity. GII 2022, however, points to a pronounced slump in economic productivity since the 1970s. Put simply, productivity is about how efficiently we produce things. Improvements in productivity directly boost economic output relative to the population, improving living standards, for example, by lifting people out of poverty and eradicating arduous tasks.

Major economic downturns aside, productivity and economic output grew year-on-year worldwide throughout the 19th and 20th centuries.

While it took 50 years for productivity to double after 1870, it has since doubled roughly every 25 years. As a result, in 2021, an hour worked in high-income economies produced, on average, 24 times more goods and services compared to 1870. The rise in living standards since the 19th century and the First Industrial Revolution can be traced to technological breakthroughs, new waves of invention and innovation, and the effective diffusion of new technologies across economies.

Unfortunately, since the 1970s, there has been a sustained slowdown in productivity. The slowdown intensified during the global financial crisis of 2008/2009 and has since worsened. In 2021, global labor productivity fell sharply to zero, and is forecast to stagnate in 2022, largely because of higher energy costs.
For middle-income economies, the trend is not so clear-cut. China’s productivity growth gathered speed from the 1980s, but has slowed already over the last decade. Most other emerging economies, however, were never part of the productivity spurt, in particular Africa, Latin America, and most economies in the Middle East and Asia. Notable exceptions are India, Indonesia and Türkiye. Indeed, the problem for most developing economies is that they have never enjoyed increasing productivity growth.

See
https://www.wipo.int/wipo_magazine/en/2022/04/article_0001.html