Productivity/Technology

Definition

Productivity refers to the efficiency with which inputs are transformed into outputs within an economy. Technology refers to advancements that improve productivity by enabling better methods or tools for producing goods and services.

Analogy

Imagine you have a group project to build a tower out of playing cards. If you find a new technique (technology) that allows you to stack the cards faster and more accurately, your productivity will increase, and you'll finish the tower in less time.

Related terms

Capital Deepening: Capital deepening refers to increasing the amount of capital per worker, which leads to higher productivity levels.

Total Factor Productivity: Total factor productivity measures how efficiently inputs are combined to produce outputs, taking into account all factors of production.

Technological Progress: Technological progress refers to advancements in knowledge or innovations that lead to improved technology and increased productivity.