America’s productivity is uniquely strong---investment, skills, and geology prove.

Some of America’s productivity growth comes from more investment. But total factor productivity (tfp), which strips out those effects in an attempt to show increases in efficiency and the adoption of new technology, has also increased. According to the Penn World Tables, a database for cross-country comparisons, tfp in America increased by about 20% between 1990 and 2019. The g7 as a whole averaged less than half that.

How to account for this higher productivity? For starters it is useful to identify where America is at its most productive. In 2019 Robert Gordon of Northwestern University, the dean of growth studies in America, and Hassan Sayed of Princeton divided the economy into 27 different industries to pinpoint the stars. They found them in the flourishing information and communications technology industry, and saw that they shone brightest from the mid-1990s to the mid-2000s. But the rapid growth of the bit of the economy making and connecting computers was only part of the story. The rest of the economy busied itself in using the new technology productively. Productivity growth of American businesses doubled to more than 3% annually during that magical decade, whereas their European counterparts managed less than 2%. Since then American productivity growth has fallen back towards its long-run average of about 1.5%. But it is still faster than in most other rich countries, and still driven by the technology sector.

The roots of America’s success as a technological innovator go deep; Silicon Valley was generations in the building. The reason why its wares were put to such productive use, though, are more easily seen, and still apply today. Simply put, they are skills, size and spunk.

Big wheel keeps on turning

First, American workers are, on average, highly skilled. This might seem jarring given conventional wisdom, not least in America, about the failures of its schools. But America spends roughly 37% more per pupil on education than the average member of the oecd, a club of mostly rich countries. When it comes to post-secondary students it spends twice the average.

There are good reasons to question the efficiency of some of this spending: test results in science and maths for 15-year-olds could be better. But good—often privileged—students thrive. As a share of its working-age population, roughly 34% of Americans have completed tertiary education, according to data compiled by Robert Barro and Jong-Wha Lee of Harvard and Korea University. Only Singapore has a higher rate. The Penn World Table’s human-capital index, which is based on years of schooling, currently has South Korea in the lead; but America has, on average, been first among major economies since 1990.

America is home to 11 of the world’s 15 top-ranked universities in the most recent Times Higher Education table. Along with educating many of the brightest Americans, they have long served as conduits which deliver the world’s smartest young people to the country. Some of them go on to join the 200,000 foreign students who enter the labour force through the “optional practical training” programme every year—a figure which stayed high even under Donald Trump.

America’s economy makes good use of its highly educated workforce. Spending on research and development across the public and private sectors—a useful, though not infallible, token of future growth—has risen over the past decade to 3.5% of gdp, well ahead of most other countries. Evidence of America’s innovative prowess is furnished by the number of its patents in force abroad, an indicator of international recognition: America’s share of such patents globally increased from 19% in 2004 (the first year for which data is available) to 22% in 2021, more than any other country.

A second set of explanations is tied to America’s size. A large single market always gives a country a leg-up; the rewards to scale seen in technology have amplified this effect in America. Europe has tried to craft a unified market, but linguistic, administrative and cultural differences still pose barriers to businesses such as e-commerce platforms. As India is not yet rich enough for its size to offer benefits on such a scale, China is the only country that can truly rival America in this regard. That helps to explain the vibrancy of its consumer-tech sector—at least until Xi Jinping got his fingers on it.

Size has other advantages. Covering almost 40% of the world’s third-largest continent means the United States has access to a wide variety of geological riches—some of which it has become newly adept at winkling out. In the first decade of the 2000s America imported more than 10m barrels of oil per day in net terms. But around the same time, a revolution was under way as energy firms perfected the techniques of hydraulic fracturing and horizontal drilling to release the mineral riches in shale formations that dot the country from North Dakota to Texas. Gas and oil production soared; America now meets most of its energy needs from domestic production. In 2020 it became a net exporter of oil.