Considering the Cobb-Douglas Model: GDP = A x (K^0,3 x L^0,7)
where
GDP = Gross Domestic Product
A = Total-factor Productivity
K = Capital stock
L = Labor share
It´s clear that if "A" (productivity) goes up, it impacts all the production factors directly. Otherwise, if "A" goes down, the conversion share from efforts to GDP goes down.
So, growth in productivity is more efficient than the growth of production factors directly, in terms of "conversion" of efforts into GDP.
Productivity is an important factor in economic growth; however, other things are important as well.
For example, when workers use (better) capital equipment and (better) technology, in a (better) working environment, we would expect more output or at least some elements that are consistent with economic growth. Several things are important in total factor productivity and this highlights just a few.
An increase in the quantity and quality of resources plays a role. Moreover, China is a good example of having workers transition into different jobs over the last four or five decades. As my Chinese students talk about their grandparents in farm-like settings, it is obvious that things have changed.
The demand side of markets is important as well. Just producing more output through increased productivity, or something else, does little if that output is not valued. In other words, producing things individuals (or organizations) will not purchase is not helpful.
Dear Aurelio, prof. Catket has already explain all the things that matters.
Regards,
Janusheva
No, it seems to me that it is very real information that is coming to us from the way China is managing its capital, enriching the value of the Yuan with gold reserves and not only with "paper with no monetary value that supports it"
As Rob explained good workers to handle the available technology in a healthy working environment obviously we see satisfactory economic growth.
As you mentioned growth in productivity is more efficient than the mere growth of production. This is very much acceptable in all aspects especially quality wise more care should be taken then we see the sustainable results.
José Luis, thank you for your new look.
I´ll pay attention.
Best regards.
Dear Jetty Ramadevi,
I strongly agree with Dr Rob Catlett, and liked very much of your insight too.
Thank you very much.
Best regards.
Higher Productivity is the outcome of investment in human capital and increased efficiency of physical capita. Also it is a fact that the higher productivity gives stimulus to human resource including Labour if the distribution system is fair and is tied up with increased productivity. Strong nationalism to become super power is also one of the motivating factor in case of China in addition to high earning motivation to individual workers and producers.
Dear Scientists,
While I work on my research projects, I share some parts with specialists to have some support and critics. I believe that it makes better the quality of my work.
Thank you to have participated actively in the discussions I proposed. Your vision is a very good contribution to me. The best way to make me a better scientist.
All the best for all of you.
AH
Thank you very much for the kind insights, fellow scientists.
All the best for all of you.
Prof. A. Hess
Let me add this:
Article China's Economic Miracle its Myth and Power Retention by the...
Dear @ Shaho,
Production and Productivity are different concepts.
Could you explain the differences, please? It was not clear for me by your answer.
Thank you.
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