In 1987, the Nobel prize-winning economist Robert Solow said: "the computer age can be seen everywhere but in productivity statistics". This statement responded to a paradox that had been observed during the computer revolution of the 1970s and 1980s but that it was not yet possible to discern its impact on productivity.

However, it was in the 1990s that technological transformations were widely deployed, allowing large technology sectors and employers such as retail and wholesale to lead productivity gains that impacted on their processes, supply chains and distribution. Falling equipment costs in ICTs unleashed a wave of corporate investment that generated better inputs and outputs, enabling organisations to operate with lower costs and greater efficiency, delivering superior products to the market at more competitive prices.

Today we find ourselves in a scenario similar to that described by Solow: the productive potential of digitalisation is a fact, but it is not yet observable at the aggregate level and has not yet materialised on a large scale. Moreover, over the last decades, global productivity has slowed down.

As a plausible explanation of the phenomenon, it can be argued that there were exogenous and endogenous factors that contributed to this decline in productivity, such as: the financial crisis of 2007-2008, the European crisis of 2011, the depletion of the productive potential of emerging countries, regulations and policies that do not encourage growth, and the weak translation of technology into new productive improvements. We could also consider that the methodologies used to measure the statistical significance of digitalisation as an explanatory variable for productivity fail to capture its effects correctly.

Various research (Brynjolfsson, Rock and Syverson 2018), observe that the processes of applying new technologies require investments in intangible assets such as: human capital, new processes and organisational structures that are not captured in short-term productivity statistics.

In this sense, it is possible that we are going through an "intermediate" stage of the installation of the digital economy that requires a reordering of production systems before these intangible investments mature and their effects are fully observable (an effect similar to what happened in the 1980s, which materialised 15 years later).

In this factsheet you will find out in more depth what the paradox we are currently facing is all about.