The collapse in total factor productivity (TFP) is by far the main cause of the disappointing growth in the US since 2008. In general, TFP captures the efficiency with which labor and capital are combined to generate output. This depends not only on businesses’ ability to innovate, but also on more efficient resource allocation, market dynamism and “creative destruction.”

But what we have seen over the years is strained corporate balance sheets and a dysfunctional banking sector have weakened capital investment and led to slower implementation of technical advances and a misallocation of capital to zombie companies. By actively

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