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.

Published by Ramon H. Enriquez MIE&M, RME

Ramon ("Mon") Hojas Enriquez is a retired business executive who now spends his available time sharing the wisdom that he gained from his post-graduate academic preparations and 35+ years of hands-on industry practice here (Philippines) and abroad; as an Independent Management Consultant and as a Professional Lecturer/ Resource Speaker. He now focuses on management consulting, education and training---in the fields of Supply-chains, Strategy-execution, and Decision-support. His affiliations with relevant leading global industry associations such as: The Association for Supply Chain Management (ASCM), Project Management Institute (PMI), Institute for Operations Research and Management Sciences (INFORMS), American Society for Quality (ASQ), International Institute for Business Analysis (IIBA), Institute for Supply Management (ISM), System Dynamics Society (SDS), among others) keeps him informed and updated on the current and future developments in his above-mentioned fields of specialization. Mon is a lifelong Systems Thinker and an avid micro-Blogger. His hobby includes Photography and the Graphics-arts, Singing, Guitar-playing, Songwriting, and Audio recording & mixing. When not traveling or visiting Clients, he normally spends his time at his office cum studio or, QC-home with his Wife and dog.