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Despite an unprecedented wave of innovation sweeping across industries, many economies in 2025 remain trapped on a plateau of stagnant growth. Global output expanded by just 2.8% this year, the slowest in decades, while private investment flatlined and foreign direct investment retreated. At the heart of this slump lies a paradox: technology adoption surges ahead, yet the benefits concentrate among a select few, leaving others to struggle with outdated systems and faltering productivity. uneven diffusion of innovation remains aggravated by infrastructure gaps and policy fragmentation.
Labor productivity growth has turned negative in many advanced economies, and in the G-7 it barely nudges above zero. Tariffs hover at century-high levels—22.5% on average in the United States—eroding cross-border efficiency. Companies hesitate to invest amid geopolitical uncertainty, and digital transformation efforts stall. As firms weigh the costs of automation and AI, the promised productivity dividends often fail to materialize without complementary changes in skills, processes, and organizational culture.
The result is a widening chasm between technology leaders and laggards. While some benefit from early adoption, most fall behind due to capital constraints, talent shortages, or regulatory barriers. powerful winner-takes-all productivity effects emerge when advanced firms leverage digital platforms, cloud computing, and data analytics to scale rapidly, forcing competitors to keep pace or risk obsolescence. This dynamic reinforces existing inequalities within and across borders, making inclusive growth more elusive than ever.
More than 86% of businesses plan to integrate digital platforms between 2023 and 2027, and global IT spending is set to grow by 9.3% in 2025. Yet adoption rarely unfolds uniformly. Large multinationals and highly capitalized startups race ahead, while SMEs and enterprises in developing markets struggle to keep pace. Disparities in education systems, broadband connectivity, and access to venture capital further amplify these gaps.
Regional divides continue to sharpen as advanced economies reap the full promise of digitalization. Countries with robust research ecosystems, strong governance, and well-developed legal frameworks attract the lion’s share of investment, drawing skilled talent and fostering high-growth clusters. Meanwhile, others grapple with underinvestment in basic infrastructure and limited public-private collaboration.
Artificial intelligence and automation hold immense potential to boost global productivity by 0.5 3.4% annually from 2023 to 2040, with generative AI alone adding up to 0.6 percentage points of growth. Firms that adopt AI-driven tools can streamline routine tasks, enhance decision-making, and unlock new business models, driving output per worker to new heights. However, realizing these gains demands more than technology deploymentit requires holistic change in operations, processes, and skill development.
Current upskilling efforts fall short, with only 45% of manufacturing workers engaged in training for advanced technologies. Without targeted programs to build data scientists, AI specialists, and automation engineers, a talent bottleneck will deepen. Organizations must invest in reskilling the workforce for the future and expand partnerships with educational institutions to close this skills gap before it becomes a roadblock to sustained productivity growth.
Several obstacles impede the diffusion of technology beyond a narrow elite. Fragmented regulatory regimes stifle cross-border data flows and digital trade. Limited access to affordable financing leaves many smaller firms unable to upgrade equipment or adopt cloud services. Persistent skills shortages hamper both high-tech sectors and traditional fields, widening the technology divide rather than closing it.
These barriers are interlinked: poor infrastructure discourages private investment, while regulatory uncertainty raises the cost of capital. Addressing one challenge in isolation will not suffice. Policymakers and business leaders must work together to tackle root causes, ensuring that technology adoption generates broad-based, sustainable productivity improvements.
To bridge the widening gaps, stakeholders must adopt a multifaceted approach that combines investment, policy reform, and collaboration. First, governments can incentivize digital adoption among SMEs through targeted grants, tax credits, and public-private partnerships. By subsidizing connectivity and cloud services, policymakers can lower the entry barriers for smaller enterprises.
Reforming education is critical for long-term, equitable growth. Curricula must shift from rote learning toward problem-solving, creativity, and digital fluency. Partnerships between industry and academia can align training with real-world demands, ensuring graduates possess the skills employers need today and tomorrow. Lifelong learning platforms, micro-credentials, and modular courses enable workers to update their skill sets continuously in response to evolving technologies.
Corporate investment in employee development should extend beyond on-the-job training to include mentorship programs, innovation labs, and collaboration with research institutions. By fostering a culture of continuous improvement, organizations can turn every technological upgrade into an opportunity for their teams to learn, adapt, and innovate. Such an ecosystem strengthens productivity resilience and democratizes access to the gains of digital transformation.
Technology alone cannot close the world’s productivity gaps; it must be paired with inclusive policies, strategic investments, and robust collaboration across sectors. Without concerted action to address infrastructure deficits, training shortfalls, and regulatory bottlenecks, the productivity divide will only widen. Yet by focusing on bridging the infrastructure and capital gaps and promoting equitable adoption, we can harness digital innovation to foster prosperity that truly reaches every corner of the global economy. The challenge is significant, but the opportunity to create a more balanced and resilient future is within our grasp.
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