What Is Productivity? How Do You Measure It?ByRaymond D. Matkowsky
Simply put, productivity is efficiency in production: how much output is obtained from a given set of inputs. However, each industry has its own slightly different definition. Each definition stresses a different factor as the important one.
Productivity and the Economy
Generally, a country’s economy is made up of many industries. Each one makes up a component of overall productivity. However, they may measure productivity differently. For example, South African diamond miners have been restricting output in order to keep prices up. OPEC does the same with oil. Financial consideration governs productivity here. Depending on whether these would be major or minor industries, you may have to modify your productivity thinking and formula.
Many, if not most, industries calculate productivity on the basic input-output model. However, those that do not can skew the results. A recent British study indicated productivity is not uniform throughout Britain.
Variability of Productivity
The area around London was found to be highly productive. Another report found that Scotland had a productivity improvement rate of 1.0% in 2024 while the British Isles had a general improvement rate of 0.4% and the EU had a 0.8% rate of improvement. Productivity has been of concern in a number of countries.
I am reminded of a time in college when I was taking an Electricity and Magnetism course. The professor told me that when I had a malfunctioning circuit not to look at the circuit as a whole. It is too complex. It only confuses the situation. Look at small sections. Fix them if they need fixing and move on to the next area. Eventually, the entire circuit will be fixed much faster. The same is true with the complex factors affecting productivity.
A nation needs to break its productivity analyses into smaller units that could be managed more efficiently. These units could either be regional or by industry. Factors can be unique to that segment. They may not deal with production at all. The various factors can also be synergistic and may need an analysis of variance to sort out.
You should see improvement throughout the process by repairing each unit. As you repair each section, overall productivity should improve. Eventually the productivity of the entire nation should improve.
Artificial Intelligence and Productivity
I would like to say a few words about Artificial Intelligence (AI.) What you are reading right now is hype. It is a technology that will be a tremendous advancement to mankind. However, it is not ready now. It will possibly start to be useful in twenty to forty years. It is computer driven. Computers require programing with this knowledge. Mankind has centuries of knowledge to program. It may be a long time.
Star Trek fans how useful AI is thought to be in the future. The Enterprise-D computer in Star Trek: The Next Generation (TNG) is constantly called upon to make a rapid analysis of a problem. Occasionally, the computer comes back and says it has insufficient data to draw a conclusion. TNG takes place in the 24th century. Star Trek is fiction. So was the smart watch in the Dick Tracy comic strip of the 1940s. Does Apple view it as fiction now? However, even in the 24th century computers can be seen as lacking sufficient knowledge. We live in the 21st century.
Unless you operate a dance studio, I do not see a dancing robot as improving your productivity.
If you have any comments, let us know. Email me at rdm@datastats.com. We will try to print it in our next newsletter.
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