Innovation and Productivity: Is Learning by Doing Over?

Abstract

Labour productivity is one of the key measures of economic performance. It represents the total volume of output produced per unit of labour. This paper examines the influence of business investments in research and development and education on labour productivity using system dynamics modelling. The results reveal that investments in education and training activities generate higher labour productivity growth. The impact of innovations largely depends on their diffusion and adoption that require educated and trained users. The new industrial era makes learning by doing quietly disappear and demand a great flexibility of workers and their ability to rapidly acquire new and master the existing knowledge.