The "productivity J-curve" is a concept in economics that describes the relationship between investments in intangible assets, such as research and development (R&D), and measured productivity growth over time.

The J-curve illustrates how initial investments in intangibles can lead to an apparent slowdown in productivity growth in the short term but generate significant productivity gains in the long term.

The concept of the productivity J-curve is particularly relevant when discussing the impact of general-purpose technologies (GPTs) on the economy. GPTs, such as artificial intelligence or electricity, are technologies that have the potential to transform a wide range of industries and drive long-term economic growth.

When a new GPT is introduced, firms invest heavily in intangible assets, like R&D, to develop complementary innovations that can harness the power of the new technology. During this initial investment phase, measured productivity growth may appear to slow down, as the immediate benefits of these investments are not fully captured in traditional measures of economic output.

This phase represents the downward portion of the J-curve.

As the investments in intangibles start to pay off and new innovations are introduced, the economy experiences a surge in productivity growth. This phase corresponds to the upward portion of the J-curve, where the benefits of the investments in intangibles are finally realized, and the overall productivity gains from the new GPT become evident.

The productivity J-curve highlights the importance of taking a long-term view when evaluating the impact of new technologies and intangible investments on economic growth. Policymakers and businesses must recognize that investments in intangibles may not yield immediate returns but can drive significant productivity improvements in the future.