What have learnt from the major studies of the critical role productivity in economic growth.

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Babs

20 October, 06:28

What have learnt from the major studies of the critical role productivity in economic growth.

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Tori Francis · Answer 1

Productivity is one of the most important factors in the generation of economic growth.

Economic growth occurs when more output is produced, either with the same amount of inputs, or with a higher amount of inputs than before.

When more output is produced with the same inputs, it is because productivity has risen.

Productivity is closely linked with investment, and investment is closely linked with saving.

The cycle is usually like this: economic agents save some of their income, and this income is then invested in assets that improve the way firms produce and deliver goods and services. In other words, these new assets generate increases in productivity which finally result in economic growth.