Productivity

Abstract

Productivity may be defined in a number of different ways, and the best definition to use at any particular time will depend upon the use intended for the measure productivity. Price changes and the difficulty of adding together the volumes of different types of inputs or outputs present problems in the calculation of all but the simplest types of productivity measures. The more complex or all-embracing a particular measure is, the greater the computational problems are likely to be, giving a greater scope for error. When account is also taken of the extra labour involved in their calculation, it may well be that for many purposes the aggregate measures of productivity arc not worth computing, although superior in concept. Increases in productivity can help to slow down the rate of inflation, and speed up the growth in real incomes, but productivity change is only one of the influences affecting these aspects of our economic life, and in a complex, interdependent, modern world, the beneficial effects of productivity growth may be hard to pinpoint, especially for individual groups within society. Problems of definition, measurement and distribution of the benefits aside, relatively high levels of productivity are the foundation of our high standard of living. Growth of productivity provides the key to a better way of life in both rich and poor nations, and the more efficient use of all resources which is implied with increased productivity is an attractive bonus to a world becoming increasingly conscious of the limited supply of some resources. It has been one of the aims of this paper to bring home the point that productivity should not be presented as a cure-all of all economic ailments, since the failure to achieve the claimed benefits may lead to its disenchantment of the whole idea of working towards a more productive society. Such doubts must not be allowed to hinder efforts to increase productivity. Despite the influence of other factors, productivity growth must always be seen as a major way of achieving progress towards some of the most important goals of all societies.