This paper was published by the Productivity Institute on December 2, 2025.
Abstract
Against the backdrop of slower growth globally, U.S. productivity growth has been faster than many peer economies. We argue that the reasons for U.S. productivity leadership go to both the remarkable engine of innovation represented by public and private sector research and development and to the economic dynamism that promotes the adoption of new technologies, the introduction of new business models, the entry of innovative firms, and reallocation of labor and capital to their best uses. This paper uses the policy scheme proposed by Dirk Pilat and Bart Van Ark to look at the source of growth: factor accumulation, competition policy, support of technology, and policies to support internationalization. We also explore the emerging technology of AI and its likely impact on future growth, the labor market, and the distribution of earnings. There is a brief history of U.S. productivity and policy, including the surge of growth in the late 1990s and early 2000s.
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Acknowledgements and disclosures
The opinions are the authors’ own and should not be attributed to the Trustees of the Brookings Institution or to the Federal Reserve Board. The authors thank Ryan Decker for his helpful discussions.
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