Productivity

PRODUCTIVITY

Productivity is the quantitative relationship between the number of inputs employed and the number of outputs produced. For example, productivity on a farm involves the inputs (or resources) of land, labor, tractors, feed, etc., and the outputs (outcomes) of crops and livestock. An increase in productivity means that more outputs (crops and livestock) can be produced from the same or fewer inputs. For instance, crop productivity on a farm may increase because the farmer planted a new, genetically engineered crop designed to be more resistant to insects and disease. The crop is planted on the same amount of land the farmer used the year before, however, the sturdiness of the genetically engineered plant allows more of the crop to survive the growing season and be harvested, increasing the farmer's productivity.

An increase in crop yield is a single-factor productivity indicator. A single-factor productivity indicator defines itself as one factor, rather than many, contributing to increased productivity. Another single-factor productivity indicator may be output per man-hours worked. Several factors combined can also contribute to increased productivity. They are called multi-factor productivity indicators. Total farm output per unit of input is a multi-factor measure.

Productivity plays a vital role in the economy. Increased productivity in national industries can raise the standard of living and the quality of life. It can also improve production efficiency and enhance competition. Technological advances have played a large role in increasing industrial productivity in the twentieth century. However, growth through improved technology may also work against an economy, creating unemployment, as the number of workers needed to produce the same output declines. For instance, with the advent of the multi-purpose tractor in the agricultural industry many tasks previously done by manual laborers were mechanized. The laborers who could not adjust their skills to meet the changes in the industry saw their jobs disappear. Unemployment brought on by changing technology and worker inability to meet those needs is called structural unemployment.

Though productivity and growth clearly affect a nation's economy there is no single way to measure it. Inputs and outputs involve numerous variables and no method has developed to accurately capture all the factors involved.

See also: Structural Unemployment