Improving Productivity

Quezon City, Philippines.

Improvement in productivity has positive economic effects both at the micro and macro levels.

Productivity is an average measure of the efficiency of production. It can be expressed as the ratio of output to inputs used in the production process, i.e. output per unit of input. When all outputs and inputs are included in the productivity measure it is called total factor productivity (TFP).

From the recent production function studies conducted for the US economy it has been found that labor’s share is about 70 per cent and capital’s share is about 30 per cent of national income. We can obtain the growth in output, (i.e. GDP) by using the following growth equation.

% ∆ GDP = % ∆TFP + 0.70 (% ∆L) + 0.30 (%∆K)

Where

GDP = Gross Domestic Product

∆TFP = Change in total factor productivity

∆L = Increase in the quantity of labour

∆K = Increase in the capital stock

This relationship was well-expounded in the literature, and some of relevant blogs can be found in Facebook’s Improving Productivity page.

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About Ramon H. Enriquez MIE&M, RME

Ramon H. Enriquez is a retired business executive who now spends his available time sharing his more than 35 years of industry experiences in the Philippines and abroad as; an Independent Management Consultant for, and a Professorial Lecturer of leading Metro-Manila universities on the various value-creation and strategy-execution topics that he now specializes: Supply-Chains, Operations, Quality, Enterprise-Projects, and Decision-support---their system designs and management, in particular. His affiliations with relevant leading global industry associations (APICS, CSCMP, PMI, INFORMS, ASQ, ISM among others) keeps him updated on the current and future developments in these fields. He is a lifelong Systems Thinker/ Modeler, and an avid Micro-blogger. His hobby includes Digital-photography/ -graphics, Singing, Acoustic guitar playing, Songwriting, and Audio-recording/ -mixing. When not traveling, he normally spends his time at his Quezon City home-office with his wife, Gay; son, Dax; and dog, Brutus.
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