Productivity Paradox-min

Productivity Paradox

We are in the eighties. Our society was immersed in a computer boom, which brought the possibility for thousands of companies to incorporate computers as work tools.

At that time, it was the same society that began to consider that they were facing a new labor era, where efficiency would increase with a decrease in working time.

However, it was in 1987 when Robert Solow, a famous American economist and winner of the Nobel Prize in economics that same year, said: “I see computers everywhere, except in productivity statistics”.

This statement was called the “Productivity Paradox”, because despite the great technological advances that were being implemented with the rise of computers and information technology, if we look at the growth of productivity, we can say that the development between one and the other was not in line. While one was going up, the other was going down.

There was a breakthrough in computing power and ICT. One study shows that although computer development in the U.S. increased 100-fold between the 1970s and 1980s, there was a slowdown in productivity of about 3% in the 1960s and 1% in the 1990s.

It was in 1987, as mentioned above, that this paradox was popularized by Robert Solow’s famous phrase.

It should also be noted that in the decade after the 1990s, there was a rebound in productivity.

The causes are not known with certainty. It could be due to the delay in ICT investments, or to the intensive use of semiconductors popularized in those years, encouraging the number of innovative projects, and with it, productivity.


As a conclusion, there is no conclusion whatsoever, since even today, this approach continues to generate debate.

On the other hand, we can say that the business world is increasingly turning towards digital transformation, and many companies are not yet ready.

As a personal opinion, there is no denying the progress that information technology has made in terms of productivity in recent years, but it is true that, if we carry out an exhaustive search of the different profitability of companies, these have not varied in the same proportions.

Again, in my personal opinion, I believe that on many occasions inefficient progress has been made.

What I mean is that there is an excess of programming, data and functionalities that make the operability of these technologies much more difficult.

Excesses end up causing complications, so perhaps companies should focus on much simpler and optimized processes that do not require extensive knowledge, training, or tedious manuals that shorten our productive time.

Looking further into the long term, I think it is clear that as we increase investment in these types of technologies, they will steadily and exponentially increase in terms of productivity and profitability.

There are certain historical parallels, such as the steam engine or electricity, where in the years of their implementation, we can see how they were slow and disruptive processes. However, these delays disappeared decades later, leading to the conclusion that in the long term it is possible to achieve the desired economies of scale.

The thought that machines in the future will be able to do much of the work that is done by human capital alone may seem problematic. However, again in my opinion, I believe that there would be more advantages than disadvantages.

Some of these advantages could be a higher quality of life in society, less stress, more time to spend with your loved ones, more freedom… and we could even rethink some proposals in society such as the Universal Basic Income.

Now yes, as a conclusion, we can say that in the long term we will find the indirect effects that investments in ICT will have produced, improving the quality of material goods, robotics, human capital formation and its subsequent qualification, Cloud Computing, more innovative and optimized strategies, information speed, 3D printing, artificial intelligence …. that will undoubtedly contribute to create the basis for building an improvement in society in virtually all areas, and thus, a growth in both productivity and profitability.


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