Productivity and Economic Growth

The term ‘productivity’ is sometimes defined in a manner which makes it almost synonymous with economic growth. Even when applied to labour alone, omnibus expressions such as ‘production per person employed’ would make changes in productivity more or less coterminous with changes in the average standard of living. It is not uncommon in economic literature to come across formulations which relate the overall rates of growth of the economy to the rate of growth in the work force and in productivity. So construed, the term productivity would include everything that makes for growth except changes in the size and structure of the population pyramid. But if our intention is to isolate ‘productivity’ as an important but distinct determinant of economic progress, it should be given a less majestic meaning which excludes from its scope factors such as changes in the available supply of natural resources and capital. The universe of our discourse then would be those attributes of labour or the ‘human factor’ which can make a positive difference to total production without requiring a proportionate addition to the supply of natural resources or capital or, indeed, labour.