Many pundits have talked about “the Fourth Industrial Revolution,” but what does it mean? Franklin Equity Group’s Matt Moberg explains how the current pace of innovation is driving productivity gains—and accelerating economic growth.

View the full paper “Investing in Innovation.” An excerpt follows.

Innovation has persisted throughout the course of history, but it has not always progressed in a predictable or linear fashion. Innovation is episodic. Periods when we have seen increases in new ideas and technologies typically coincide with sustained and accelerating economic growth.

Consider: Growth in the Western world from AD 1 to AD 1820 was approximately 6% per century.1 By comparison, Americans enjoyed a doubling of real output every 32 years throughout the 20th century.2 Before then, real output required 12 centuries to double.

Economists define these periods as industrial revolutions. Typical of their creativity, they refer to them as the First, Second, Third and Fourth, the First beginning in 1760.

We believe we are living through the Fourth Industrial Revolution today, and that it is driving the current pace of innovation in the marketplace. Building on the Third, a digital revolution occurring since the mid-20th century, the Fourth reflects many technologies—blurring the lines between physical, digital and biological spheres.