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The amount of output per unit of input, such as the quantity of a product produced per hour of capital employed.
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A measure of the units of benefit for each unit of work. Benefits include results of work such as GDP or revenue, while units of work include capital and labor. Productivity in the United States is measured by the U.S. Department of Labor on a quarterly basis. It is beneficial for both individual companies and economies to have the maximum amount of productivity possible.
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The efficiency with which output is produced by a given set of inputs. Productivity is generally measured by the ratio of output to input. An increase in the ratio indicates an increase in productivity. Conversely, a decrease in the output/input ratio indicates a decline in productivity.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


the relationship between the physical output of a product and the factor inputs which have gone into producing that output. Productivity is usually measured in terms of output per man hour, an improvement in productivity showing up as an increase in output per man hour.

Productivity is important to a firm because it enables the firm to establish a COMPETITIVE ADVANTAGE over rival suppliers: a. given output can be produced at a lower resource cost, enabling a firm to supply this output at a lower price; or alternatively the firm can now produce more output from the same amount of inputs, enabling the firm to increase its total profit return. A high rate of growth of output per man hour also puts the firm in a better position to absorb inflationary cost pressures arising from wage increases and increases in raw material prices, should it be difficult (see PRICES AND INCOMES controls) or competitively inopportune to increase prices on a pro rata basis.

A firm can improve its productivity in a variety of ways, including the adoption of better working practices (particularly the removal of RESTRICTIVE LABOUR PRACTICES) and pay-incentive schemes (for example PROFIT-RELATED PAY and PROFIT-SHARING schemes); the adoption of methods for economizing on the STOCKHOLDING of raw materials (for example the JUST-IN-TIME stock ordering system). An especially important source of productivity improvement is the use of superior production methods (for example switching from labour-intensive BATCH PRODUCTION to continuous capital-intensive MASS-PRODUCTION processes), and investment in the latest ‘state-of-the-art’ technologies (for example COMPUTER-AIDED MANUFACTURING systems (CAM) and COMPUTER-AIDED DESIGN (CAD)). See LEAN MANUFACTURING, ECONOMIC GROWTH, EXPERIENCE CURVE, SPECIALIZATION, HOSHIN.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson


the relationship between the OUTPUT of an economic unit and the FACTOR INPUTS that have gone into producing that output. Productivity is usually measured in terms of output per man hour to facilitate interfirm, interindustry and intercountry comparisons. An increase in productivity occurs when output per man hour is raised. The main source of productivity increases is the use of more and better CAPITAL STOCK (see CAPITAL WIDENING and CAPITAL DEEPENING).

This important point can be illustrated in the following three stages:

  1. Suppose, initially, that the assembly of a motor car is a labour-intensive operation: it takes a team of 10 men working with a minimal amount of capital (spanners and screwdrivers only) one whole day to assemble one car;
  2. The firm now invests in hydraulic lifting gear (CAPITAL DEEPENING), and this cuts down considerably the amount of time in aligning parts for assembly, reducing the time it takes to complete the assembly operation to, say, one tenth of a day

    The same team of men is now able to assemble 10 cars a day - its productivity has gone up tenfold;

  3. The firm introduces a continuous-flow assembly line with automatically controlled machines (again, capital deepening), which one man can operate. Output increases to, say, 50 cars a day; the productivity of the remaining man has increased from 1 car a day (a one-tenth part of 10 cars) to 50.

    Just as importantly, 9 men have been ‘released’ from the team. Either they too could all be put to work on a similar automated assembly line (capital widening), in which case the total output of the 10 men is now 500 cars per day (10 x 50), compared to 50 before. Alternatively, they could be redeployed outside the car industry, thereby helping to increase output in other sectors of the economy

    Increased productivity thus makes an important contribution to the achievement of higher rates of ECONOMIC GROWTH.


Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
The difference between the productivity index and the global value proposition index (1.15 and 0.74) (Table 1; columns 5 and 6) reinforces this view.
Figures 5a to 5c shows barley crop productivity index for the three different study periods 1980-81 to 1994-95 1995-96 to 2008-09 and 1980-81 to 2009- 2010 respectively.
Moghaddas, "Modified Malmquist productivity index based on present time value of money," Journal of Applied Mathematics, vol.
The first sub-section describes the very definition of efficiency, whereas the second one presents the Malmquist productivity index. The Malmquist productivity index enables to quantify the changes in firm-specific efficiency as well as global shift in the production frontier.
The optimal welding speed has been found experimentally changing welding method and type, power strength and voltage for higher productivity index.
- control grain yields] / Applied nutrients] Calculation of plant productivity index: The deductive (crop parameters) additive approach was modified to calculate an overall plant productivity index (PPIndex), based on "higher values of any growth and yield parameters of crops are better indicators of productivity" at any time (Aziz et al., 2011).
The factors influencing productivity index include shot density, perforation penetration, phasing angle, shot diameter, etc.
The productivity index, as evaluated for time increment [DELTA]t, is:
This means that labour, capital, and materials and their changes in quality are analysed and aggregated using the measure of total factor productivity index. The only problem that in practice, both measurements of outputs and inputs involve aggregation problem.
This research investigates sources leading to productivity changes for the US forest products industry during the time period from 1997 to 2009 using the contemporaneous and global Malmquist productivity index (MPI) approaches.
In testing operations, 20[degrees] API oil was produced at high flows and with an excellent productivity index. Petrobras is the block's operator, holding 30%; Sonangol Sinopec Int'l Ltd (SSI) holds 40%; Sonangol P&P, 20%; Geminas, 5%; and Falcon Oil the remaining 5%.
In the empirical evidence the Malmquist productivity index will be calculated using the aforementioned nonparametric programming techniques; (5) then, in order to calculate the productivity of the b DMU between t and t + 1, it is necessary to solve four problems of linear programming: [D.sup.t.sub.0] ([X.sup.t], [Y.sup.t]), [D.sup.t.sub.0] ([X.sup.t+1], [Y.sup.t+1]), [D.sup.t+1.sub.0] ([X.sup.t], [Y.sup.t]) and [D.sup.t+1.sub.0] ([X.sup.t+1], [Y.sup.t+1]).

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