Productivity

Published on January 2017 | Categories: Documents | Downloads: 58 | Comments: 0 | Views: 536
of 3
Download PDF   Embed   Report

Comments

Content

Productivity In the classical theories of development the process of economic growth and the question of what generates growth always constituted development economics. Publications such as Romer (1986) and Lucas (1988), in general, and those “making the determinants of growth a topic for the centenary of the Economic Journal” (Stern 1991), in particular, indicated the popularity of growth. Figure 1: Economic components of development

Agriculture

Production

Manufacturing

Service

Capital

Economic

Resources

Natural

Technological

Development

Growth

Distribution

Population

Urbanization

Production, resources and population are the main factors required for economic growth. Capital accumulation results from reinvestment of saved income in order to increase future production (Stern 1991). In the absence of domestic savings, investment may be through foreign finance. New investments either directly increase the capital stock or indirectly facilitate the process of productivity maximization by investing in infrastructure, irrigation, and training. Algebraically, in the neo-classical form, production function is written (Kaspura 1978, 206) as Y= f (K, L, t). Y (national output) is a function of K (capital), L (labour) and t (technical progress). The concept of the production function, relating output to different combinations of factor inputs, is used to show how societies provide their material requirements. Developing countries are characterized by relatively low levels of labor productivity and standard of living, and high levels of unemployment, population growth, and economic and political dependency. According to Todaro (1996, 47-48), most of the problems in developing countries are related to low levels of managerial competence, information, workers motivation, raw materials, technology, finance, institutional flexibility, appropriate education and health, and high levels of dominance, dependence, and vulnerability in international relations. Population growth is a multidimensional factor in development economics. While population increase has always been one of the major concerns of development planners, large population may be considered a positive factor to economic growth, regarded as more manpower to produce, or as the foundation of demand for production and a more reliable domestic market. Population density may coexist with prosperity. For example some highly urbanized and rich countries such as England and the Netherlands are densely populated (Grant and Middleton 1987, 36). Increases in population have significant impact on environment and resources (World Resources Institute 1994-1995, 28). The short-term influence of population and population growth on an economy

depends on many factors such as the capacity of the economic system to productively employ the added labor, as well as managerial and administrative skills. However, improvement in the production capacity of the national economy, or, an increase in the Gross National Product, is regarded by most development economists as the initial step in the path of economic development. With limited resources, an increase in Gross National Product is associated with the allocation of resources between the three productive sectors of the economy - agriculture, manufacturing and service industries, which will be discussed in this article.

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close