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productivity,in economics, the output of any aspect of production per unit of input. It is a measure of the output of a worker, machine, or an entire national economy in the creation of goods and services to produce wealth. Output can be measured in output per acre for land, per hour for labor, or as a yearly percentage for capital. A high national productivity typically indicates efficient production of goods and services and a competitive economy, but productivity growth can occur during periods of recession and increased unemployment as businesses cut jobs and seek to become more efficient. Productivity gains in the United States have, since the late 1940s, averaged around 2%. Productivity rose an average of 2.5% each year in the 1950s and 60s, then only 1% per year during the 1970s and 80s. Low industrial productivity (especially in the automotive industry) in the United States was a major concern in the 1970s and 80s, as Japanese innovations in assembly linesassembly line,
manufacturing technique in which a product is carried by some form of mechanized conveyor among stations at which the various operations necessary to its assembly are performed. It is used to assemble quickly large numbers of a uniform product.
..... Click the link for more information. and other manufacturing operations led to greater productivity gains in there; Japan's resulting competitive edge led to increased exports to the United States and was a factor in the downturn in U.S. business in those decades. During the 1990s and 2000s manufacturing productivity increases averaged 4% (overall nonfarm productivity was 2.2%), but during much of the decade American productivity increases were matched or surpassed by those in many European countries and Japan. Average U.S. productivity increases were even higher until the Great Recession (2007–9), and then dropped significantly.
In a business or industrial context, the ratio of output production to input effort. The productivity ratio is an indicator of the efficiency with which an enterprise converts its resources (inputs) into finished goods or services (outputs). If the goal is to increase productivity, this can be done by producing more output with the same level of input. Productivity can also be increased by producing the same output with fewer inputs. One problem with trying to measure productivity is that a decision must be made in terms of identifying the inputs and outputs and how they will be measured. This is relatively easy when productivity of an individual is considered, but it becomes difficult when productivity involves a whole company or a nation.
Industry and government officials have adopted three common types of productivity measures. Partial productivity is the simplest type of productivity measure; a single type of input is selected for the productivity ratio. The company or organization selects an input factor that it monitors in daily activity. Direct labor hours is a factor that most companies monitor because they pay their employees based on hours worked.
Total factor productivity is a productivity measure combines that labor and capital, two of the most common input factors used in the partial productivity measure. This measure is often used at the national level, because many governments collect statistics on both labor and capital. In calculating at the national level, the gross national product (GNP) is used as the output.
Total productivity is a productivity measure that incorporates all the inputs required to make a product or provide a service. The inputs could be grouped in various categories as long as they determine the total inputs required to produce an output.
Many factors affect productivity. Some general categories for these factors are product, process, labor force, capacity, external influences, and quality.
There are many different plans that companies develop in an attempt to improve productivity. Wage incentive plans and changes in management structure are two ways that companies focus on the labor force. Investment in research and development allows companies to develop new products and processes that are more productive. Quality improvement programs can reduce waste and provide more competitive products at a lower cost. See Methods engineering, Operations research, Production planning