Does Productivity of factors play a crucial role or a secondary one?
Should Underdeveloped and Developing countries give priority to Productivity, Labour, Capital or Land?
Please, share your valuable knowledge. Thank you!
Higher productivity of manufacturing and services may lead to better economic developments.
Proper utilisation of resources such as labor, material, capital , land etc leads to better value addition for production and services.
Productivity as combination of efficiency of production and services and effectiveness in terms of delivery in time and quality may lead to better economic development.
If we take productivity, assets and liquidity as an economic triangle, we can observe that productivity is usually 'consumed' by the private holders of assets (economic rent) and liquidity is used to 'book and transfer' the accounts (unearned income). I call this civilizational phenomenon the 'Sisyphean economic trap', i.e. I strongly favor land value taxation to make productivity work for the public good.
Economic resources function differently in different societies, partly because social reasons, for example, impact on economic development. For developing countries, land may not produce the wealth that leads to greater development: wealth becomes entrenched: fewer people employed for lower wages: if used principally for agricultural purposes again the wealth produced may prove limited.
Production can work in order to raise people's aspirations and encourage disciplined working habits, but unless exceptional markets are found, not proven to increase economic growth competitively. Labour in the wealthier countries has become devalued and although people work long hours in developed countries the work is varied with less concentration on physical, repetitive effort. Social, mental and perceptual change is required.
Product manufacturing productivity, technology innovation and customer service services are important as an engine of change in an economic model; with greater reason if not only they are limited to the quantity, but also to the quality of the same, and that in the relation Cost-Benefit, win both the investors as the producers, managers and clients, creating a virtuous circle.
The question is wether productivity impacts economy. I think, there we have to say: Yes, of course. But productivity depends from conditions. Are their ressources for production which don't damage the life basic of the population, in a long-term view? Is there a market and the need for trade with such products? What's about the competion of devoloped country regarding the respect product? I think that in an economically somewhat better developed country ecological factors have better chances to be noted. But there are so different situations wihin the countries so that it is difficult to suggest a general regulation.
First of all "work". In the debates, the issue of work was stopped, bringing a disconcerting discussion on the political agenda, the one on the "labor market", a work perceived in the same way as a commodity that produces itself, leaving suffrage that strong anthropocentrism in the eighteenth century Illuminism and not less in the 60s - 70s of the last century, and not only that, but it was also abandoned the possibility of facilitating workers with social control over production and production factors and control over the consumption of raw materials.
In developed countries, productivity is much greater than in underdeveloped countries because they value women more and utilize them more effectively in the workforce. Amir
An increase in productivity has a direct effect on employment and economic which help country to develop and high income.
increases in labour productivity within economic sectors is the main driver of economic growth (rather than sectoral re-allocation). In particular, growth in industry and services play an important role for aggregate economic growth.
Increase in Productivity definitely plays a role upon the economic growth, like there is demand for the products ...... buying power is high by the people ..... the quantum of the increase is questionable based upon the requirements.
Mere productivity increase to what it is supposed to be will not be helping the economic growth.....
What is productivity?
Productivity is a measure of the efficiency with which a country combines capital and labour to produce more with the same level of factor inputs.
Output per hour worked in the UK was 15.9% below the average for the rest of the G7 advanced economies in 2015; this compares with 15.8% in 2014.
Output per worker in the UK was 16.6% below the average for the rest of the G7 in 2015.
We commonly focus on labour productivity measured by output per person employed or output per person hour.
A better measure of productivity growth is total factor productivity which takes into account changes in the amount of capital to use and also changes in the size of the labour force.
If the size of the capital stock grows by 3% and the employed workforce expands by 2% and output (GDP) increases by 8%, then total factor productivity has increased by 3%.
What are the main determinants of productivity in a country?
Access to Hard Technology
Skills of Labour Force
Quality of Management
Training and Education Standards
Competition within markets
Cultural Factors such as attitudes and aspirations.
Thanks
Why is productivity important?
Productivity is an important determinant of living standards – it quantifies how an economy uses the resources it has available, by relating the quantity of inputs to output. As the adage goes, productivity isn't everything, but in the long run it's almost everything.
Higher productivity can lead to:
Lower unit costs: These cost savings might be passed onto consumers in lower prices, encouraging higher demand, more output and an increase in employment.
Improved competitiveness and trade performance: Productivity growth and lower unit costs are key determinants of the competitiveness of firms in global markets.
Higher profits: Efficiency gains are a source of larger profits for companies which might be re-invested to support the long term growth of the business.
Higher wages: Businesses can afford higher wages when their workers are more efficient.
Best regards
Hi,
Economic growth: If an economy can raise the rate of growth of productivity then the trend growth of national output can pick up.
Productivity improvements mean that labour can be released from one industry and be made available for another – for example, rising efficiency in farming will increase production yields and provide more food either to export or to supply a growing urban population.
If the size of the economy is bigger, higher wages will boost consumption, generate more tax revenue to pay for public goods and perhaps give freedom for tax cuts on people and businesses.
https://www-forbes-com.cdn.ampproject.org/v/s/www.forbes.com/sites/billconerly/2015/05/19/productivity-and-economic-growth/amp/?amp_js_v=a1&_gsa=1&usqp=mq331AQCCAE%3D#amp_tf=%D9%85%D9%86%20%251%24s&share=https%3A%2F%2Fwww.forbes.com%2Fsites%2Fbillconerly%2F2015%2F05%2F19%2Fproductivity-and-economic-growth%2F
Many factors affect Productivity and economy, including the most important productivity Pls. find the attached files
Hoping this will be helpful to your project, good luck https://www.enterprise-development.org/what-works-and-why/evidence-framework/increased-productivity-creates-economic-growth/
https://www.itu.int/en/ITU-D/Regulatory-Market/Pages/default.aspx
http://economicswebinstitute.org/glossary/prdctvt.htm https://www.forbes.com/sites/billconerly/2015/05/19/productivity-and-economic-growth/#3d1c1b7b5417
I believe productivity in Underdeveloped and Developing countries should be given priority.
Start with good people, lay out the rules, communicate with your employees, motivate them and reward them. If you do all those things effectively, you can’t miss. – Lee Iacocca
Productivity is a measure of the efficiency with which a country combines capital and labour to produce more with the same level of factor inputs.
Output per hour worked in the UK was 15.9% below the average for the rest of the G7 advanced economies in 2015; this compares with 15.8% in 2014.
Why is productivity important?
Productivity is an important determinant of living standards – it quantifies how an economy uses the resources it has available, by relating the quantity of inputs to output. As the adage goes, productivity isn't everything, but in the long run it's almost everything.
Higher productivity can lead to:
- Lower unit costs: These cost savings might be passed onto consumers in lower prices, encouraging higher demand, more output and an increase in employment.
- Improved competitiveness and trade performance: Productivity growth and lower unit costs are key determinants of the competitiveness of firms in global markets.
- Higher profits: Efficiency gains are a source of larger profits for companies which might be re-invested to support the long term growth of the business.
- Higher wages: Businesses can afford higher wages when their workers are more efficient.
- Economic growth: If an economy can raise the rate of growth of productivity then the trend growth of national output can pick up.
- Productivity improvements mean that labour can be released from one industry and be made available for another – for example, rising efficiency in farming will increase production yields and provide more food either to export or to supply a growing urban population.
- If the size of the economy is bigger, higher wages will boost consumption, generate more tax revenue to pay for public goods and perhaps give freedom for tax cuts on people and businesses.
The Productivity Gap
What are the main determinants of productivity in a country?
- Access to Hard Technology
- Skills of Labour Force
- Quality of Management
- Training and Education Standards
- Competition within markets
- Cultural Factors such as attitudes and aspirations
South Korea is an example of a country that has achieved sustained improvements in labour productivity – a key factor behind escaping the middle-income trap. Higher productivity growth is a key reason why South Korea has now become a high-income member of the OECD.
Productivity improvements in China
China has achieved impressive gains in productivity in recent years and is catching up towards levels for the East Asian and Pacific region and middle income countries such as Malaysia.
What has driven these improvements in Chinese total factor productivity?
Although China's productivity improvements are impressive, the process of catch-up with advanced nations still has a long way to go. China's labour productivity is about 12 per cent of that of the USA
Productivity and economic growth using an AD-AS diagram
Improving Productivity in Agriculture – Focus on the Indian Farm Sector
For India, despite attempts at land reform to boost incentives for farmers, agricultural value added per worker expressed in real US dollars has grown slowly. The divergence between India and South Korea is striking.
The virtuous circle of rising agricultural productivity
- Higher farm output per worker
- Increased incomes
- Higher savings
- Creates funds for capital investment
- Frees up labour for urban areas
- Surplus output exported
In 2011, nearly 70% of Indians still live in the countryside and over half work on the farm but many are tenant farmers operating with short-term leases on their land and with little incentive to invest in machinery to improve farm yields and incomes. For example, annual rice yields in the Indian state of West Bengal remain at about half China's level and below yields in Indonesia, Taiwan and Vietnam. Productivity is further hampered by inadequate infrastructure including poor roads and vulnerability to external climatic shocks such as droughts and floods.
Critics of India agriculture argue that whereas China has liberalized farming markets and encouraged farmers to build up surpluses to sell in local and regional markets, the India government spends too much money subsidizing fertilizer, power and water and price supports for certain farmers that have done little to stimulate diversification among rural producers.
eference/https://www.tutor2u.net/economics/reference/productivity-and-economic-growth
regards
Dear All,
I am afraid, the original question must have been more complicated as it was. Productivity and production must be tailored to the environmental conditions firstly to the sustainability. Another point of view may be taking into account the demographic changes as well as the possibilities of automatization and artificial intelligence. Theoretically, one may think that developed and developing countries may have various constrains and limits but regarding the principle and obligation of sustainability without common forecast, planning and execution mankind has no future.
Productivity always contributes the most to economic development of a nation.
The productivity of industrial products, exponentially increase the services and human resource consumption which may lead to better economic development of a state.
Regards,
Jahangir
Labor and Capital are 2 most standard inputs in economic production function. Historically, land was also there. Now some people (including me) are using it again. Which powers should be in Cobb-Douglas production function? This is econometric question; we need to estimate the fractions of factors in the produced output. Suppose that we know that the fraction of Labor is 50%. But the same job can be done by 10 workers with low productivity or 3 workers with high productivity. Productivity is then the output produced per worker per unit of working time.
If there are many unemployed, a county can increase labor input intensively, by attracting more workers, even with low productivity. But if the number of workers is fixed, then an increase in productivity is necessary for economic growth. In some cases workers can be substituted by capital, but this depends on exact technology.
What is more important - labour, capital or land - depends both on production technology and relative factors scarcity.
Dear Dr. Aurelio Hess,
Productivity has impact on economic developments. But productivity without a dynamic supply chain will not be effective for better economic developments.
Economic development is the process by which a nation improves the economic, political, and social well-being of its people. The term has been used frequently by economists, politicians, and others in the 20th and 21st centuries. The concept, however, has been in existence in the West for centuries. "Modernization, "westernization", and especially "industrialization" are other terms often used while discussing economic development. Economic development has a direct relationship with the environment and environmental issues.{{explain|reason=this conclusion is far from obvious. Economic development is very often confused with industrial development, even in some academic sources. This conclusion may be one example. Whatever the reason the conjecture needs an explanation.
regards
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Asmaa Abdulkareem
University of Al-Qadisiyah
Good question , I'm following answer
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Aurelio Hess
Faculdades Oswaldo Cruz
Dear Fellow Scientists,
Thank you very much for all these insights. I will take a good look at the material and answers before next comment.
Hess
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Good question and very interesting contribution to the overall discussion on the roots of development (not only in developing economies). I have read it all with great interest! Thank you, Aurelio, for raising the matter.
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I agree totally that productivity is an important factor of economic development. It is obvious that productivity impacts economic growth, although the way it influences economy may differ due to internal and external conditions.
There have been several important issues already addressed in this discussion. I would emphsize one more aspect: the human and social capital is increasingly important factor and its meaning will grow. Its important to remember while creatning economic policy especially in developing countries which may win the dynamic growth by introducing means to foster human and social capital.
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Ashok Pundir
Indian Institute of Management Mumbai
Value addition in manufacturing , agriculture, services leads to growth and economic development.
One of the important measure for productivity is called Total Factor Productivity. This is the ratio of value added by the organisation divided by cost of labor and capital used during the period. This helps in comparing the productivity of organisations carrying out similar activities.
This also encourages organisations to carry out more value adding activities and in turn help in economic development.
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Akinyemi Ajibola
Bells University of Technology
Wow great contributions
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Ali Benhmidene
University of Gabès
The consequence of the economic development is nice life of the society.
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Christopher Nock
Nock & Associates
There's so many answers here from people far more qualified than me, I feel like a fraud! And that is quite possibly the first thing to get sorted... that, and other corruptions.
Christopher NOCK
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Virgilio Malagon
Universidad del Caribe (Dominican Republic)
¨Productivity¨ is almost a non linear function, as a dependent variable, in which intervenes, among other things:
1-Working Enviroment
2-Motivation
3-Earnings
4-Indirect Cost
5-Taxes
6-Market
If the above variables are in equilibrium, then the ¨Productivity Factor¨ will be at its maximum. However, one have to take as granted, that ¨Productivity¨will always be cost-effective, otherwise for the Firm is useless.
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Wisdom Okere
Bells University of Technology
great contributions
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Khalid Siddig
International Food Policy Research Institute
Dear Aurelio Hess,
you need to promise us that you would eventually summarize this informative discussion, which can be included in our development course material.
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Yuji Kohno
Yokohama National University
Many people recognize the importance of improving productivity for economic development.
However, the meaning of "improvement of productivity" is often misunderstood.
The belief that "economic development is difficult in the service industry" is born from such misunderstandings.
As an example of improving productivity, it is instantly thought that increasing production of products and lowering production costs can be achieved by using more advanced technology or introducing state-of-the-art equipment.
For this reason, research and development of science and technology is emphasized, but if you take an eye on quantitative expansion, there is a danger that the economy will move in the wrong direction. Rather, economic development can be realized by returning to old technology and decreasing production volume.
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Marco Rao
ENEA
Dear Dr. Hess,
the importance of productivity in economic development is evidenced by the great amount of scientific literature available on the subject. Intuitively, it is clear that to determine what impact it has on growth, it is necessary to carry out a series of qualifications related to the particular context in which the analysis is carried out, as evidenced by the many comments received.
I would like to point out a recent work ( Beugelsdijk, 2017 ) on this subject, in which the authors documents the fact that the large and persistent differences in economic development across subnational regions in the European Union can largely be attributed to total factor productivity (TFP).
https://rsa.tandfonline.com/doi/abs/10.1080/00343404.2017.1334118#.Wxozv4q-mHs
Furthermore, please find attached another document maybe of some interest for you.
Best regards,
Marco
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Mehmed Ganic
International University of Sarajevo
Productivity growth is one of the essential precondition for long-term and stable economic growth and development, and strengthen the competitive position of the local economy...Permanent investment in human capital increases productivity, employment and contributes of innovation and long-term competitiveness...
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Aurelio Hess
Faculdades Oswaldo Cruz
@Khalid Siddig
and
Dear all fellow scientists,
It will be my pleasure to organize all this material to offer you all a good report.
In fact, I research Economic Development in Brazil with a focus on Productivity, so it´s going to be an excellent job to do, to read carefully, answer all the points and report.
Thank you all for participating in the discussion.
My best wishes for all of you.
Prof. Aurélio Hess
Business and Economics Research Center
Tel.: +55 (11) 2609 8713
Whatsapp: +55 (15) 99113 8620
E-mail: [email protected]
Visit: www.oswaldocruz.br/pos/default.asp
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Christopher Nock
Nock & Associates
Very good. Many thanks.
NOCK
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Maher M Merhej
Tishreen University
All answers are great
But the most important question,
Today, we are in 2018, are we still talking about traditional methods of improving productivity?, and the world is developing and moving towards the management of minds and talents and how to invest intellectual capital?
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7 Recommendations
Liviu Catalin Andrei
National University of Political Studies and Public Administration
This question reminds me of what/whom (?) I really don’t like, i.e. Vladimir Ilici (Ulianov) Lenin with his remark that (this time) I basically approve: (see, approximately)‘ the new order (i.e. communism) will over pass this one (i.e. capitalism) when its productivity will be higher (than the other’s one)'. And this time I even more deeply agree the same idea as going to that productivity, unfortunately, is something that is broadly to be reached, first (i.e. a target), and then an ‘economic developing tool’ -- like this dialogue is about. It might be rare that something is both policy target and tool -- that is the case here of productivity, but let us equally think about the exchange rate's case for monetary policy.
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Ardeshna N. J.
Junagadh Agricultural University
Productivity has direct impact on economic development. Increase in productivity means reduction in per unit cost of production.
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Emmanuel V Murray
National Bank for Agriculture and Rural Development
There is no doubt that productivity has a direct impact on Economic Development, as the Output per unit input rises and benefits all.
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Adebayo Adeboye Fashina
Advisory and Consultancy Services
Great Question! Insightful Comments!
Following...
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Hanna M. Madanat
National Agricultural Research Center - NARC
It is an economic concept th simply defined as a measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs.
Productivity is calculated by dividing average output per period by the total costs incurred or resources (capital, energy, material, personnel) consumed in that period. Productivity is a critical factor of cost efficiency. Labour productivity is a revealing indicator of several economic indicators as it offers a dynamic measure of economic growth, competitiveness, and living standards within an economy.
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Yoshinori Shiozawa
Osaka City University
Aurelio Hess's question contains a serious theoretical problem. Productivity is a measure (what? I will argue later) that is related to productions. Factors of production such as labor, capital and land are inputs to the production. If the productivity is defined as an aspect of production, factors of production have no productivity. This is a gross confusion. As Leonardo Andriola pointed, there is no productivity of labor. An article of Forbes mentioned by Khulood Obaid admits, labor productivity is difficult to measure. Productivity is related to how we work. To talk of productivity of production factors is a category mistake we have to exclude.
I understand why Hess made such a fundamental error. Ashok Pundir and Marco Rao talked about total factor productivity. This is one of the most popular concepts in growth theory which starts from Solow's seminal paper:
Solow, Robert (1957) "Technical change and the aggregate production function". Review of Economics and Statistics. 39 (3): 312–320.
Total factor productivity (TFP) was a name given by him to the Solow residual, i.e. the output growth which was not explained by the increases of factor inputs. Solow suggested this can be explained as the contribution of technical changes and this explanation was accepted by wide people. However, if TFP may indicate a productivity, it is not the productivity of something called total factor. There is no such thing.
Khulood Obaid posed a good question: what is productivity? Hanna M. Madanat presented a concrete procedure to calculate the productivity. He is right. If the prices and wage rates are given, his procedure is the most standard way of measuring productivity. However, productivity and prices or unit costs (either unit product cost or unit labor cost) are closely related. If the labor productivity is high, the unit labor cost is low. If input goods are cheap, unit product cost is low. So the most argument on measuring productivity is formulated in a circular way. This poses a serious problem when we want to define or measure productivity of a nation. On the national level, wage rate and labor productivity are almost the same thing. In other words, wage rate and productivity are two sides of a paper. It is rare to find any definition of productivity that are free of logical circularity.
Another difficult question emerges, because we are now in a globalized economy. No single nation is now a closed economy. Productivity depends on the trade pattern that a nation occupies in the world economy. Then, to define productivity properly, it is necessary to have a theory that can explain how the wage rates and prices are determined. Such a theory now exists. It is the new theory of international values. It is a theory which determines international values (i.e. wage rates of nations and prices of goods) and global patterns of specialization at the same time. Productivity of a nation can only be defined by the total structure of sets of productions techniques that each nation potentially possesses. My conclusion in this post is that real wage rate of a nation is the unique possible measure of the productivity of a nation.
See my paper: Shiozawa, Y. (2017) The new theory of international values: an overview. Chapter 1 in Shiozawa et al. (eds) A New Construction of Ricardian Theory of International Values: Analytical and Historical Approach, Springer, Singapore. You can read a draft version of the paper in RG.
https://www.researchgate.net/publication/304717720_The_New_Theory_of_International_Values_An_Overview
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Yoshinori Shiozawa
Osaka City University
Now that the conceptual question concerning productivity is settled, we can start real arguments on productivity. As the article in Forbes mentioned by Khulood Obaid states, "Productivity is the most important determinant of the standard of living." Mehmed Ganic pointed that the "Productivity growth is one of the essential precondition for long-term and stable economic growth and development, and strengthen the competitive position of the local economy.." Arben J Salihu
and others rightly pointed that a precondition for high productivity to mean high economic performance was to have a good (at least satisfactorily good) system of economic institutions.Hassan Nima Habib asked: Why is productivity important? Khalid Al-Salhie questioned the very concept of economic development. Joanna Gocłowska-Bolek
asked the mechanisms in which high productivity produces economic growth.These propositions are right but, in my impression, they are not well explained. Those who have posted have a good recognition, but lack a proper framework to explain their contentions. Here again, there seems a lack of appropriate theory by which to explain economic development among the international competition.Houda Kawas, Khulood Obaid, Virgilio Malagon, and Hassan Nima Habib argued the productivity enhancing conditions .They are all right. But we must ask why and how these productivity enhancement leads to an economic growth. Development theory needs its proper theory.
Although I do not claim that the new theory of international values is a sufficient framework to argue development, it is at least a necessary theory which has been out of sight for majority of economists who are working on economic development of developing countries. Of course, it should be combined with and supplemented by other theories like evolutionary economics, institutional economics and classical development theories that Paul Krugman called satirically "high theory." The new theory gives a very different image how economy grows. I believe it will help people to consider what have been hidden under the neoclassical dominance of growth theory.
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Sathishkumar Sankar
National Institute of Technology, Agartala
Good question professor...I am eagerly waiting more answers.....
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Aurelio Hess
Faculdades Oswaldo Cruz
Dear Dr. Maher M Merhej
I can understand your comment, and in fact, I share - in part - your feelings about it. I do believe that we should be worried about something more significant than productivity in this 'era.' Yet we have different countries in different situations and conditions in the world. Some of them may be concerned about something "higher," but to the underdeveloped and developing ones, productivity (seen here as the efficiency that production factors are used) is the way today to be different and have different worries tomorrow.
Thanks for sharing your opinion. You are always welcome to share thoughts.
Best,
Aurelio Hess
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Aurelio Hess
Faculdades Oswaldo Cruz
Dear Dr. Stanley Wilkin
I believe that you have captured the essence of the question of productivity (seen here as the efficiency that production factors are used) - we have different countries in different situations and conditions in the world. Some of them may be concerned about something "higher," but to the underdeveloped and developing ones, productivity is the key!
Best.
Aurelio Hess
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Aurelio Hess
Faculdades Oswaldo Cruz
Dear Dr. Ashok Pundir
Indeed, the way you describe " Productivity as a combination of efficiency of production and services and effectiveness regarding delivery in time and quality may lead to better economic development" is the direction that I tried to point to the question.
In fact, I intended to see if all, or most of all economists agree with this direct and positive correlation.
Thanks for sharing.
Best.
Aurelio Hess
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Aurelio Hess
Faculdades Oswaldo Cruz
Dear Dr. Mehmed Ganic
In your text " Productivity growth is one of the essential precondition for long-term and stable economic growth and development, and strengthen the competitive position of the local economy...Permanent investment in human capital increases productivity, employment and contributes of innovation and long-term competitiveness..." I can see that you totally agree with the correlation between efficiency (that comes from human capital increases) and economic development. The contribution to innovation was not forgotten, you are right.
Best
Aurelio Hess
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Aurelio Hess
Faculdades Oswaldo Cruz
Dear Dr. Liviu Catalin Andrei
Among all the comments, yours "... that productivity, unfortunately, is something that is broad to be reached, first (i.e., a target), and then an ‘economic developing tool’ -- like this dialogue is about" have had the stronger impact on my vision about productivity. In fact, it´s more a target that an achievement - at least for some of us developing countries. But a target is always a goal to be pursued, and this is the way we (developing and developed countries) are working on it, don´t you agree? Please, forgive me if I misunderstood your thought, but trying to clarify - do you disagree with the argument that 'productivity is a tool for development'?
Thanks for sharing your invaluable thoughts.
Best.
Aurelio Hess
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Aurelio Hess
Faculdades Oswaldo Cruz
Dear Dr. Hanna M. Madanat
Thanks for making even more evident that " ... a measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs." Indeed, the direction of my aking was the same that you mentioned: "Productivity is calculated by dividing average output per period by the total costs incurred or resources (capital, energy, material, personnel) consumed in that period."
The reason why this question is important is precisely what you revealed: "Productivity is a critical factor of cost efficiency. Labour productivity is an indicator of several economic indicators as it offers a dynamic measure of economic growth, competitiveness, and living standards within an economy." I could not agree more!
In fact, I intended to see if all, or most of all economists agree with this direct and positive correlation.
Thanks for sharing.
Best.
Aurelio Hess
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Aurelio Hess
Faculdades Oswaldo Cruz
Dear Dr. Yoshinori Shiozawa
Thanks for giving so much attention to this question.
Indeed, as you posted " Aurelio Hess's question contains a serious theoretical problem," maybe I should have been more careful, specific, and precise in the proposed question. Perhaps I was simplest, even though I just wanted to know if there is a consensus among economists about the direct and positive correlation between the variables.
I proposed this question because I intend (soon) present an econometric study showing something new about it (with new I mean not mentioned before in the reviews I have seen!). And I thank you again for making me more careful when I present my study in the future.
As you´ve said " Total factor productivity (TFP), i.e., the output growth which was not explained by the increases of factor inputs. Solow suggested this can be explained as the contribution of technical changes and this explanation was accepted by wide people. However, if TFP may indicate productivity, it is not the productivity of something called total factor. There is no such thing." indeed you are right. Nevertheless, it is colloquial to say just 'Productivity' when it is clear that the meaning is 'Total Factor Productivity.'
But I could not let to notice that your correction had an exciting and enricher proposition: to offer the solution.
And you did: "Then, to define productivity properly, it is necessary to have a theory that can explain how the wage rates and prices are determined. Such a theory now exists. It is the new theory of international values. It is a theory which determines international values (i.e., wage rates of nations and prices of goods) and global patterns of specialization at the same time." and I need to be more aware of your work to be able to comment, but I thank you again, for giving me this opportunity.
This will permit me to know if your proposition: "Productivity of a nation can only be defined by the total structure of sets of productions techniques that each nation potentially possesses. My conclusion in this post is that the real wage rate of a nation is the single possible measure of the productivity of a nation." is as precise as it seems to be. For now, I agree since my feelings tell me to, but I intend to read your work carefully before my final comment.
It was enriching to have you here, contributing to our discussion. As soon as I read your work, I will let you know.
Best wishes.
Aurelio Hess
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Roberto - Minadeo
Conselho Nacional de Des. Científico e Tecnológico-CNPq
The search for greater productivity is natural when there is competition. Everyone benefits from this because they reduce the real prices of competitive sectors.
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Yoshinori Shiozawa
Osaka City University
Roberto - Minadeo
Individual firm is forced to raise its productivity (which is, in the firm level, no other things than the inverse of the cost per product) by competition, the final objective of the productivity raising is to raise the real wage rate of workers. It represents the major part of population and thus contribute to raise the Gross Domestic Production per capita.
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Roberto - Minadeo
Conselho Nacional de Des. Científico e Tecnológico-CNPq
Dear Dr. Yoshinori Shiozawa. Great observation. Congrats.
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1 Recommendation
Marco Bittencourt
Instituto Federal de Brasilia - IFB
There are several ways to look at productivity. That I like goes back to Adam Smith in his fable about the pin factory. By the substitution of men by machines in repetitive activities. Therefore, when there is an opportunity to replace such activities in a ubiquitous way, as I observe in the United States, Canada, Europe and in Asian countries with a developmentalist veneer, this counts a lot for the trajectory of a nation's growth. In these nations where wages are already high, and such opportunities are used to make real wages increase. But I note that in countries like Brazil where wages are low and business opportunities usually captured by specific groups, dont see of this substitution of men for machines. And when you see, the unemployed find shelter only in the slums of big cities. It is thus in rural activities in this undevelopment countries as Brazil.
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1 Recommendation
Yoshinori Shiozawa
Osaka City University
I may have written the same thing somewhere. Productivity (labor productivity in particular) is a sword with double blade. Imagine a firm (or a country) which is in an international competition. To survive the competition, you are forced to raise the productivity. However, if you do not succeed to enlarge the demand for your products, you are obliged to lay off your workers. It seems Brasil is trapped with this dilemma.
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2 Recommendations
Marco Bittencourt
Instituto Federal de Brasilia - IFB
Perhaps Brazil is trapped in this dilemma. I believe that the model that best describes Brazil is that of looting as suggested by Douglas NOrth in 2006 during a visit to Brazil, according to an interview in Veja magazine of the time. A simple definition of looting would be as follows: when the private sector in the exercise of its activities generates a profit that does not even far exceed the social costs for its implementation. It is ubiquitous im my country. The history of Brazil is complex, because local details and historians have not, in my judgment, done a good job. Research space is very attractive. Let the Brazilianists come again. They have been missing for some time.
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1 Recommendation
Aurelio Hess
Faculdades Oswaldo Cruz
Dear Dr. Marco Bittencourt ,
I agree with you, and I would like to recommend a book that explains wonderfully this one, and some other fundamental problems of Brazil:
Por que o Brasil cresce pouco - Marcos Mendes
https://www.loja.elsevier.com.br/por-que-o-brasil-cresce-pouco-9788535278606.html
I research Brazil for about 30 years and have never seen such an explanation before.
Hope it helps you as it helped me.
with best
A. Hess
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Nelson Saldias Seguel
University of Bío-Bío
Read this book: The Power of Productivity: Wealth, Poverty, and the Threat to Global Stability https://g.co/kgs/FHLywE
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1 Recommendation
Aurelio Hess
Faculdades Oswaldo Cruz
Dear Dr Nelson S Seguel,
Thank you very much for the TIP. I have bought right now to read in my Kindle for PC.
Best wishes.
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Nelson Saldias Seguel
University of Bío-Bío
You are welcome.
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1 Recommendation
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Productivity is a key aspect of economic growth. However, it is also important to choose what should be produced with the growing importance of taking into account the issue of ecology, care for the protection of the natural environment.
Best wishes
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2 Recommendations
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