Macroeconomics One of the Key

Macroeconomics

One of the key concepts in macroeconomics is productivity. This is partly because in most cases, productivity is used as a measure of the economic growth of a country. In this text, I will concern myself with productivity in an economy. In so doing, I will discuss its importance as well as how it is impacted upon or affected by technology, research and development (R&D) and education.

Productivity: Its Importance

According to Taylor (2006), "productivity is defined as output per hour of work." The author further notes that the annual increase in productivity in percentage terms is referred to as productivity growth. With that said, the relevance of productivity to an economy cannot be overstated. In general terms, productivity remains one of the main ways of measuring the economic performance of a nation. Basically, enhanced productivity is accompanied by economic growth as more goods tend to be produced in this case. For instance, if 50 workers can now produce what was being produced by 60 workers earlier on, productivity growth can be said to have occurred. Such growth enables companies (in aggregation) in a given economy to compete more effectively with entities from other countries in a highly competitive global marketplace. It is also important to note that to determine how effectively an economy's resources are being used; productivity measures such as capital equipment productivity are used.

The Effects of Technology, Research and Development and Education on Productivity

It can be noted that in one way or the other, productivity is impacted upon by technology, research and development (R&D) and education. When it comes to technology, Taylor (2006) describes the term as "anything that raises the amount of output that can be produced with a given amount of labor and capital." Basically, new and better technology enhances productivity. As Taylor notes, productivity has inevitably improved in the recent past as a result of the development of computers.

In regard to education, it can also be noted that the same also has a significant impact on productivity. Where education helps individuals to be more specialized in firms, productivity is more likely to increase. This is in line with Taylor's (2006) assertion that "specialization of workers at a firm adds to productivity." Further, the author is of the opinion that to enhance the productivity of workers, many companies choose to provide their employees with on-the-job training. In a way, the skills such workers develop while undergoing training or furthering their education is what ends up impacting positively on their productivity. Hence for a nation with a highly educated workforce, productivity levels are bound to increase.