Once our economy is productive, we will enjoy better and wealthy lives. It is also a shared agenda with the government, employers and employees, who all benefit if it can be improved. “The … Either can increase the overall size of the economy but only strong productivity growth can increase per capita GDP and income. When there is productivity, there is the possibility of an improved standard of living. Productivity is the fuel of our economy. In a CEO summit in 2016, Terry Scuoler, industrialist and supporter of UK manufacturing and engineering, said on why productivity is so important, “Productivity performance is a key driver of long-term economic growth and prosperity. Achieving labour productivity growth is a key determinant of long term growth for the economy and … (47) productivity measures of important economic magnitudes arose in the face of a theoretical tradition which denied them any relevance to economic structure or policy. It’s what lifts the standard of living, helps keep prices low, reduces government budget strains, and drives corporate profits. As productivity rises, the wages of workers increase. More goods and services are produced, stimulating wages and business profitability. Productivity is important to individuals (workers and consumers), business leaders , and analysts (such as policymakers and government statisticians). Innovation and productivity growth bring vast benefits for consumers and businesses. Productivity drives economic growth that’s why it affects the entire community. Productivity is the chief long-term driver of corporate profitability and economic growth. They have more money in their pockets, and so can buy more goods and services. Productivity drives investment returns whether we recognize it or not. Economists view the growth in labor productivity, or output per worker, as the single most important variable in an economy. I have chosen a theme-economic growth and its sources-that has played a highly significant and continuing role in the Con- These can also be viewed as key components of economic growth. The main determinants of labor productivity are physical capital, human capital, and technological change. The better the workforce, the more profitable is the business, and the more prosperous a society can be. With growth in productivity, an economy is able to produce—and consume—increasingly more goods and services for the same amount of work. Productivity growth allows people to achieve a higher material standard of living without having to work more hours or to enjoy the same material standard of living while spending fewer hours in the paid labor force. If efficiency increases, output must increase faster than inputs in order to achieve efficiency. Productivity growth its followed from improvements in the production process. The answer is pretty intuitive. Why productivity growth matters At the broadest level, Treasury is interested in productivity because of our mission of improving the wellbeing of Australians, of which increasing material standards of living through improvements in productivity is one, albeit important, part. Productivity growth over the last 350+ years is what allowed America to grow from a colonial outpost into the world’s largest and most prosperous economic power. Physical capital can be thought of as the tools workers have to work with. 3 Productivity and Economic Growth Dale W. Jorgenson 3.1 Introduction The purpose of this chapter is to commemorate fifty years of research on economic measurement. The business, and technological change growth can increase the overall size the! And income bring vast benefits for consumers and businesses why is productivity important to economic growth capita GDP and income of living, helps keep low..., an economy is productive, we will enjoy better and wealthy.! 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