Question

Explain the factors which affect productivity of a nation’s workforce.

Answer 1

Physical capital, human capital and technological change are the key determinants of labour productivity. It is also possible to consider these as core components of economic development.

It is necessary to think about physical wealth as the resources employees have to work with. More formally, physical capital comprises the services and machinery used by businesses, but also utilities, highways and other transport network elements that add to the economy.

The acquired information (from schooling and experience), talents , and skills that the average worker has in an economy is human capital. Usually, the higher the total level of education in an economy, the greater the intellectual resources generated, and the greater the productivity of labour. Human capital and the accumulation of physical capital are similar: in both cases, spending is now paying off in the future through longer-term efficiency.

Technology is another aspect that influences labour efficiency. Technological progress is a mixture of technology, developments in science, and creativity that allows use of this advance in a new product or service.