Why is business productivity slowing?

This discussion examines the drivers of declining business dynamism and productivity growth. In this conversation, Professor Ufuk Akcigit speaks with Elvira Sojli, Associate Professor of Finance in the School of Banking and Finance at UNSW Business School, about evidence showing a slowdown in firm entry, innovation diffusion, and creative destruction. The discussion contrasts rising research and development spending with declining productivity growth and explains why aggregate trends must be understood through firm level dynamics. It explores how reduced new business formation, increasing market concentration, rising markups, and declining labour share signal growing market power among large firms. The dialogue also considers how weakened knowledge diffusion, changes in production processes, and stronger intellectual property enforcement can discourage entry and widen the gap between market leaders and followers, contributing to lower competitive pressure and reduced economic renewal.

Key takeaways: business entry rates are declining, market concentration is increasing, knowledge diffusion supports productivity, market power discourages entrepreneurship, and reduced creative destruction limits growth.

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Видео Why is business productivity slowing? канала UNSW Business School