- Ensures high quality of life and economic stability.
- Improves people’s economic capacities, housing, education level.
- Raises national living standards.
- Compares the growth in input to the increase in output.
- Contributing factors: organizational and technological change, reallocation of resources, industry restructuring.
National productivity is essential for high standards of living and economic health of the country. To measure its level, it is necessary to consider several aspects. Usually, it can be estimated by comparing the growth in input (labor, energy, materials) to the increase in output (services and products). Factors contributing to national productivity include organizational and technological change, reallocation of resources, and industry restructuring. Productivity growth improves people’s economic capacities, housing, and education level, as well as the structure of society and the environment. Moreover, productivity levels are significant to industries and organizations too as they can result in competitive advantages and prevent the superiority of foreign production.
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Ways to Increase National Productivity
- Improve organizational key management practices.
- Identify the factors influencing the country’s performance.
- Invest in workers’ skills and efficiency.
- Implement innovative working methods.
- Improve companies’ technical efficiency.
National productivity measures how efficiently the countries use their resources to produce output. The primary action the government should take to increase it is improving its key management practices. For independent companies, it is crucial to invest in their workers’ skills and efficiency. They should develop an approach that considers employees’ needs and focuses on the ways to achieve excellent results. The improvement in technical efficiency is also crucial as the effective use of existing technologies and developing the new ones can increase the organizations’ output.
- Discusses the determinants of productivity of the nation.
- Concerns human, natural, and physical resources.
- Considers operational strategies and relationships between them.
- Analyzes the methods of creating productivity.
- Suggests the ways to improve productivity.
The article by Arulrajah and Senthilnathan discusses the determinants of productivity of the nation. They include human resources and their characteristics, natural or physical resources and their features, systems and strategies and their components, relationships between the mentioned factors, and changes in them. The study shows that appropriate national and international policies can increase the country’s productivity (Arulrajah and Senthilnathan 16). To create national productivity, it is necessary to investigate how its determinants influence each other and learn whether their interaction is competitive or collaborative.
The Role of Determinants
- Human resources: stock of human capital, its size, and individuals’ education and knowledge (Arulrajah and Senthilnathan 13).
- Individuals form the groups’ norms, habits, and rules.
- Natural and physical resources: the nations’ investment in resources for economic development.
- Systems and strategies increase productivity by adequate governance.
The authors of the article analyze the role of productivity determinants. Human resources include stock of human capital, its size, and individuals’ education and knowledge and are the essential factors of productivity of the nation (Arulrajah and Senthilnathan 13). Individuals and their characteristics are the sources of productivity as they form the groups’ norms, habits, and rules. The concept of natural and physical resources refers to the nations’ investment in them for ensuring sustainable economic development. Appropriate national systems and strategies are crucial as they also increase productivity; every organization and institution requires adequate governance. Changes in the determinants can be can be caused by the dissatisfaction of policymakers with the status quo of a country.
Key Factors of Productivity
- Input factors: institutions, human capital, business sophistication, infrastructure (Arulrajah and Senthilnathan 12).
- Output factors: knowledge, technology, creative output (Arulrajah and Senthilnathan 13)..
- Innovative organizations: private ownership, external financing, high level of managers’ education.
- Non-innovative companies: state-owned, no foreign competitors.
The authors define five main input factors contributing to the level of national productivity. They include institutions, human capital and research, market sophistication, infrastructure, and business sophistication (Arulrajah and Senthilnathan 12). They represent the aspects that improve the national capacity to implement innovative products and services. The authors also suggest output factors that can estimate the effectiveness of innovations’ implementation by evaluating the benefits to the individuals and organizations. They include knowledge, technology, and creative output (Arulrajah and Senthilnathan 13). Notably, innovative organizations that mostly contribute to the nation’s productivity can be characterized by private ownership, accessing of external finance, and high level of managers’ education. State-owned companies that do not have foreign competitors typically represent the less innovative segment of firms.
- National productivity is crucial for individuals and organizations.
- Primary factors: organizational structure, the use of technology and resources.
- Determinants: human, natural, and physical resources, systems and strategies.
- Input factors: institutions, human capital, business sophistication, infrastructure.
- Output factors: knowledge, technology, creative output.
- Primary contributors: innovative companies.
National productivity is crucial for ensuring a high quality of life. The factors that contribute to it include the change in organizational structure, the use of technology, reallocation of resources, and industry restructuring. Productivity levels are significant to individuals, industries, and organizations. To increase national productivity, the government should improve its key management practices. Companies should develop an employee-centered approach to management, invest in their workers’ skills, and enhance their technical efficiency. The determinants of productivity of the nation include human, natural, and physical resources and their features, as well as systems and strategies, relationships between them, and changes in them. Input factors are represented by institutions, human capital and research, market sophistication, infrastructure, and business sophistication. Output factors include knowledge, technology, and creative output. Innovative companies are the primary contributors to the national productivity.
Arulrajah, Anthonypillai Anton, and Samithamby Senthilnathan. “The Determinants of Innovation and Productivity of a Nation.” Risk Governance & Control: Financial Markets & Institutions, vol. 6, no. 3, 2016, pp. 11-17.