The slowdown in economic growth was one of the most acute problems of the US economy. Many economists tried to find out the reason for that and took measures to reverse the unfavorable situation. “This slowdown in productivity growth has eluded many attempts to provide single-cause explanation, including fluctuations in energy prices, inadequate private investment, inadequate infrastructure investment, excessive government regulations, and declining educational test scores” (Gordon 50).
The slowdown in productivity growth is a global trend. Since the mid-1970s it was observed not only in the USA but also in other industrialized countries, including Canada, France and Japan. The most popular explanation of the slowdown in economic growth is connected with the oil crises that coincided with the slowdown of productivity. Rise in oil prices led to a more rapid obsolescence of much of the fixed assets and this may explain the link between elevated energy prices and slower productivity growth. The blame for the slowdown in productivity was assigned as the increased costs of regulation, such as environmental protection and improvement of labor safety. Costs of pollution control, improving safety and programs aimed at improving the health of the population, as well as losses from crime were the cause of reducing the rate of growth of output per capita in the USA. Although the immediate reasons for the regulation that could hamper growth are not known yet, valuation of empirical evidence shows that it is a negative impact on economic development of industrialized countries. These elements, taken together, could account for the slowdown in productivity growth.