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Washington / AFP
Facing slowing growth in the global economy, the International Monetary Fund (IMF) called on Thursday for policies that support research and development to promote innovation.
“Fiscal policy can play an important role in stimulating innovation through its effects on research and development (R&D), entrepreneurship, and technology transfer,†the IMF said in a report ahead of its twice-yearly meeting in Washington in April.
Among its recommendations, the IMF estimated that businesses in advanced economies should invest 40 percent more in R&D on average than they do currently, which could in the long run increase the gross domestic product of their respective countries by 5.0 percent, and in turn boost growth in the global economy through technology transfers.
Innovation is also a way to improve productivity amid concerns “that the global economy may be trapped in an era of mediocre growth,†the report said.
“The slow growth in total factor productivity (TFP) is particularly worrisome,†it said, referring to the part of output than cannot be explained by the amount of inputs, typically labour and capital, used in production. Slow growth in TFP “explains a significant part of the overall decline in potential growth since the early 2000s in advanced economies, and more recently in emerging-market economies,†warned the IMF.