Does the Import Invasion Explain the Disappearance of Productivity Growth in U.S. Manufacturing?

Robert J. Gordon and Kenneth Ryu

International Productivity Monitor, 2026, vol. 50, 49-78

Abstract: Why did U.S. manufacturing productivity stop growing after 2010? Productivity growth actually disappeared, from an annual rate of +3.3 per cent during 1987-2010 to -0.3 per cent from 2010 to 2023. This article shifts attention from 2010 as the start of the productivity growth slowdown to a decade earlier when output stopped growing. This cessation of output growth in 2000 is attributed to the invasion of imports that closed domestic plants, destroyed jobs, and squeezed profits. After 2000, a chain of causation followed that ultimately undermined productivity growth — from falling capacity utilization, to lower investment in fixed capital and research and development, and an erosion of innovation. Beyond the import invasion, the disappearance of productivity growth is also attributed to a general phenomenon of diminishing returns to innovation, the feeble influence of robots, government regulations that distorted investment, and a shrinking supply of skilled labour in the face of increasing skill demands.

Date: 2026
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