Question

Productivity is very important for both firms and nations to invest in their factors of production. When there is an increase in productivity, firms will be able to increase their output. What is productivity? How does a country's standard of living relate to productivity? How do you think both firms and a nation can increase an investment in productivity? This assignment will require you to write an analysis with a minimum of 3-5 paragraphs. You will need to focus on your analysis and address each aspect of the question. You will be graded based on your analysis and how well you answered the questions. You will submit a one-page document.

Answer 1

Productivity is defined as the efficient use of resources, labour, capital, land, materials, energy, information, in the production of various goods and services. Higher productivity means accomplishing more with the same amount of resources or achieving higher output in terms of volume and quality from the same input.

Productivity is a measure of the amount of goods and services that the average worker produces in an hour of work. The level of productivity is the single most important determinant of a country's standard of living , with faster productivity growth leading to an increasingly better standard of living.

An approach to economic policy is suggested by the idea that improving the performance of the country's economy requires investing in productivity. Newly available data on productivity make it possible to identify opportunities for productivity-enhancing investments. These investments will take many forms, but we can identify three that are critical to future productivity growth:

1. Tangible assets. This is the conventional meaning of investment. It includes investment in plant and equipment for the business sector, housing and consumers' durables for the household sector, and military equipment and civilian infrastructure for the government sector. It is useful to think of this as investment in hardware.

2. Intangible assets. Investments require the commitment of capital resources and produce changes in technology that promote productivity growth. However, not all investments take the form of bricks and mortar. A rapidly growing portion of investment takes the form of research and development, advertising and marketing, and intangibles such as computer software. I will refer to investment in intangibles as software.

3. Human capital. The most important component of investment in human capital is schooling. Formal schooling extends all the way from kindergarten to the most specialized forms of higher education.