Why is there slowdown in productivity growth despite rise of IT-driven digital environment?

By Bhabani Shankar Nayak

From the World Wide Web to generative artificial intelligence, the ever-changing landscape of digitalization defines this century. From the 16-megabyte floppy disk, CDs and DVDs to multi-terabyte digital storage devices and online storage drives, the rapid evolution of innovative products and processes in digitalization is evident. These advancements are constantly accelerating due to ongoing research and developments in science and technology.

The pace of change is so rapid that one must be a continuous learner to keep up with daily digital advancements. Digitalization has enhanced human welfare and social progress with the rise of information technology and communication. It has increased the speed of information, accessibility of goods and services to people with purchasing power and digital links. Digitalization has also increased the productive power of labour.

However, digitalization is not necessarily leading to increased productivity growth. Such a slowdown is called digital productivity paradox. It refers to the slowdown in productivity growth despite the rise of an information technology-driven digital environment, where the nature of work, workers, and the workplace is increasingly shaped by digitalization. Prof. Erik Brynjolfsson termed it “The Productivity Paradox of IT,” building on the work of Prof. Robert Solow. As a result, it is often referred to as the Solow Paradox. This puzzle of digitalization in terms the Solow Paradox has continued to expand over the last two decades. It appears that the slowdown in productivity growth and the rise of digitalization is occurring simultaneously.

There are several reasons behind the slowdown in productivity growth during digitalization. Unlike past technological innovations, digitalization exhibits inherent class and urban biases. The digital divide is its inevitable outcome. The process is largely controlled by a few individuals and their large platform companies, giving these corporations an unfair advantage in leveraging digitalization for productivity growth. Meanwhile, many small and medium-sized enterprises (SMEs) have struggled to reap its benefits. As a result, digitalization has reinforced the dominance of large corporations over people and their productive capacities. The concentration of power in the hands of these dominant corporations and their digital partners has led to a decline in creative competition, stifling new innovations that could drive productivity growth. The diminishing digital dividend and the slowdown in productivity growth are thus integral aspects of digital capitalism.

Public investment in digitalization by states and governments largely benefits large corporations. For example, the National Science Foundation funds various technological innovations using American taxpayers' money, yet private multinational companies like Apple Inc. reap the benefits. This is not unique to the United States but reflects a global pattern where public funds are used to fuel the expansion of private corporations. This trend has only intensified with the advancement of digitalization under digital capitalism.

Technology can enhance the productive power of labour only when workers have access to it and receive adequate technological training. The slowdown in productivity growth is not inherent to digital technology itself but rather stems from the way it is accessed, owned, managed, controlled, and distributed by a select few. Digital capitalism, like all forms of capitalism, acts as a barrier to the democratization of digitalization, leading to stagnation, corporate dominance, and a decline in productivity growth. Therefore, democratizing digital technology—through inclusive innovation, research and development, public ownership, equitable control, fair distribution, and transparent management—is essential to bridging the digital divide and reversing the slowdown in productivity growth.

The availability and accessibility of technology, technological education, training, platforms, and a digital environment for all are central to overcoming the capitalist-driven slowdown in productivity growth. This approach is essential to creating an egalitarian, transparent, democratic and prosperous digital world that is free from inequality and exploitation.

Comments

Academics urge Azim Premji University to drop FIR against Student Reading Circle

By A Representative A group of academics and civil society members has issued an open letter to the leadership of Azim Premji University expressing concern over the filing of a police complaint that led to an FIR against a student-run reading circle following a recent incident of violence on campus. The signatories state that they hold the university in high regard for its commitment to constitutional values, critical inquiry and ethical public engagement, and argue that it is precisely because of this reputation that the present development is troubling.

Was Netaji forced to alter face, die in obscurity in USSR in 1975? Was he so meek?

By Rajiv Shah This should sound almost hilarious. Not only did Subhas Chandra Bose not die in a plane crash in Taipei, nor was he the mysterious Gumnami Baba who reportedly passed away on 16 September 1985 in Ayodhya, but we are now told that he actually died in 1975—date unknown—“in oblivion” somewhere in the former Soviet Union. Which city? Moscow? No one seems to know.

UAPA action against Telangana activist: Criminalising legitimate democratic activity?

By A Representative The National Investigation Agency's Hyderabad branch has issued notices to more than ten individuals in Telangana in connection with FIR No. RC-04/2025. Those served include activists, former student leaders, civil rights advocates, poets, writers, retired schoolteachers, and local leaders associated with the Communist Party of India (CPI) and the Indian National Congress.

Asbestos contamination in children’s products highlights global oversight gaps

By A Representative A commentary published by the International Ban Asbestos Secretariat (IBAS) has drawn attention to the challenges governments face in responding effectively to global public-health risks. In an article written by Laurie Kazan-Allen and published on March 5, 2026, the author examines how the discovery of asbestos contamination in children’s play products has raised questions about regulatory oversight and international product safety. The article opens by reflecting on lessons from the COVID-19 pandemic, noting that governments in several countries were slow to respond to early warning signs of the crisis. Referring to the experience of the United Kingdom, the author writes that delays in implementing protective measures contributed to “232,112 recorded deaths and over a million people suffering from long Covid.” The commentary uses this example to illustrate what it describes as the dangers of underestimating emerging threats. Attention then turns...

Aligning too closely with U.S., allies, India’s silence on IRIS Dena raises troubling questions

By Vidya Bhushan Rawat* The reported sinking of the Iranian ship IRIS Dena in the Indian Ocean near Sri Lanka raises troubling questions about international norms and the credibility of the so-called rule-based order. If indeed the vessel was attacked by the American Navy while returning from a joint exercise in Visakhapatnam, it would represent a serious breach of trust and a violation of the principles that govern such cooperative engagements. Warships participating in these exercises are generally not armed for combat; they are meant to symbolize solidarity and friendship. The incident, therefore, is not only shocking but also deeply ironic.

The kitchen as prison: A feminist elegy for domestic slavery

By Garima Srivastava* Kumar Ambuj stands as one of the most incisive voices in contemporary Hindi poetry. His work, stripped of ornamentation, speaks directly to the lived realities of India’s marginalized—women, the rural poor, and those crushed under invisible forms of violence. His celebrated poem “Women Who Cook” (Khānā Banātī Striyāṃ) is not merely about food preparation; it is a searing indictment of patriarchal domestic structures that reduce women’s existence to endless, unpaid labour.

India’s foreign policy at crossroads: Cost of silence in the face of aggression

By Venkatesh Narayanan, Sandeep Pandey The widely anticipated yet unprovoked attack on Iran on March 1 by the United States and Israel has drawn sharp criticism from several quarters around the world. Reports indicate that the strikes have resulted in significant civilian casualties, including 165 elementary school girls, 20 female volleyball players, and many other civilians.

India’s green energy push faces talent crunch amidst record growth at 16% CAGR

By Jag Jivan* A new study by a top consulting firm has found that India’s cleantech sector is entering a decisive growth phase, with strong policy backing, record capacity additions and surging investor interest, but facing mounting pressure on talent supply and rising compensation costs .

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Rajiv Shah Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Search This Blog