Structural Change & Productivity Flashcards
drivers of structural change
business track trends
households adjusting their spending patterns
demographics
growth of nearby countries demanding commodities growth in ICT
globalization
societal change
levels of structural change
economy –> industry –> firms
firms –> industry –> economy
multifaceted meaning
never uniformly positive or negative
impact of structural change
*multifaceted product and processes of business procedures expanding sectors declining sectors increases knowledge base employment
productivity
the efficiency by which firms/people convert resources into outputs of goods and services
mainly measures in labor productivity
labor productivity
the quantity of output per unit of labor input (hours)
LP = output / hours worked
capital deepening
the accumulation of capital equipment per worker
(K / L) capital to labor ratio
long term trends in productivity
overtime productivity should increase as technology improves
multifactor productivity
the efficiency by which firms/people convert resources into outputs of goods and services
mainly measures in labor productivity
requires: labor, capital, management, production processes, increased ability to preform, skill accumulation
benefits of productivity
increased productivity... increases wages (increased SoL) decreases prices (increases competition) increases profits increases economic growth
drivers of productivity
investment in physical capital and infrastructure
innovation
investment in human capital (education and training)
enterprise
competition
economy wide economic stability and social and institutional capabilities
technical efficiency
the ability to produce more output for the same level of input
cost effectiveness
allocative efficiency
the lowest opportunity cost results in the highest potential output
dynamic efficiency
long term ability to adapt to change
influencing private sector investment
incentive to businesses to increase productivity
reduced barriers of implementation
facilities the movement of factors of production(encourages innovation)
