Slow productivity gains represent a significant threat to improved living standards across the globe. Businesses have been less efficient at translating inputs - such as labor, plant, and equipment – into output of real goods and services.

World total factor productivity – which includes the quantity of workers, labor skill levels, capital investment, and technological innovation – slid 0.2 percentage points in 2014, said Bart van Ark, The Conference Board’s chief economist. He believes this global phenomena needs to be addressed soon and seriously.

Output per worker grew at the slowest rate since the beginning of the millennium for nearly all regions. Productivity growth in U.S manufacturing was 6 percent from 1999 to 2006. But it plummeted to 2 percent from 2007 to 2012, according to The Conference Board.

Emerging markets are experiencing diminishing returns, advanced economies are more concentrated on services, and technological innovations are more focused on consumption – not production. Aging populations and worker retirement in advanced and emerging economies also require greater productivity for the economy to grow at healthy levels. Enhanced productivity will increase worker wages and general prosperity.

Why has productivity declined? Look to the financial industry.

The financial industry focused more on refinancing existing assets rather than facilitating investment in new endeavors. And they tended to trade these assets and extract equity rather than create added value.

Between 1998 and 2014, the average share of the U.S. gross domestic product contributed by the financial sector was 7 percent, yet its share of all profits was 29 percent, according to the Federal Reserve.

The International Monetary Fund and the Bank for International Settlements suggest the economy experiences diminishing returns as finance exceeds a certain level. When capital is extracted without commensurate production, direct investment falls along with employment, total factor productivity, wages, and consumption. To meet debt service requirements, assets are sold and prices decline, further exacerbating the downward economic spiral.

Luigi Zingalas, an MIT- trained economist and distinguished Chicago Booth professor, echoes these thoughts and goes further to suggest that the high capital extraction by finance enables expensive political lobbying to protect their business interests. This undermines the trust of the financial sector by the population at large and further erodes general economic conditions.

The key to economic growth is a decline in the footprint of the financial sector. Since the 2008 recession, this process has begun, and we may be witnessing signs of improvement.

Since 2006, the share of bank assets associated with residential mortgages fell from 31 percent to 22 percent today, while that for commercial loans rose from 16 percent to 21 percent. This mixture is more conducive to investment, employment and income gains for the many.

While nonresidential fixed investment dropped 3.4 percent in the first quarter, orders for non-defense capital goods excluding aircraft – a proxy for business investment on equipment and software – rose 1 percent in April, an increase for the second consecutive month. These data are short-term figures, so a watchful eye going forward is critical.

Once again, let’s put growth first.