Final answer:
Decreased investment in physical capital, like machinery and infrastructure, can lead to a productivity slowdown. Adequate investment in quality and innovation within physical capital is critical for avoiding or overcoming productivity issues.
Step-by-step explanation:
Physical capital contributes to the productivity slowdown when there is a decrease in the investment in physical assets like machinery and infrastructure. Although increased investment in machinery, improved education and skills, and advances in technology are generally positive for productivity, the decline in investment and the inefficient use of physical capital resources can lead to slow growth in productivity. This is because both the quantity and quality of physical capital significantly influence a firm's output and the overall economy's efficiency. Therefore, to maintain or increase productivity, adequate investment in improving and innovating physical capital is crucial.