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The world is facing the prospect of an extended period of weak economic growth. The best way to avoid such an outcome is to figure out how to channel large pools of savings into productivity-enhancing public-sector investment.

Productivity gains are vital to long-term growth, because they typically translate into higher incomes, in turn boosting demand. That process takes time, of course — especially if, say, the initial recipients of increased income already have a high savings rate. But with ample investment in the right areas, productivity growth can be sustained.

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