Productivity is the ratio of output to input. If a worker produces ten widgets an hour instead of five, productivity has doubled. That sounds like an accounting detail. It is actually the single most important determinant of living standards over the long run. A country can only consume what it produces. Rising productivity means more output from the same resources, which translates into higher wages, cheaper goods, and more public services.

What drives productivity? Better tools and technology. More education and training. Improved management practices. Economies of scale. Sometimes, simply moving workers from low-productivity sectors like subsistence farming to higher-productivity sectors like manufacturing or services. China's rapid growth since the 1980s came largely from that kind of reallocation.

Productivity growth has slowed in most rich countries since the 1970s. Economists debate why. Some blame the shift to services, which are harder to automate. Some blame declining investment. Others argue that the digital revolution is real but hard to measure. Whatever the cause, sluggish productivity growth makes every other economic problem harder to solve.

Productivity drivers

• Technology and innovation
• Education and skills
• Management quality
• Capital investment
• Sectoral reallocation