Boosting Productivity: Human Capital, Organization, and Technology
Experience enhances skills crucial for job performance. The combination of knowledge and skills, known as human capital, determines a worker’s productivity.
Organizational Impact on Productivity
The way a company is organized and managed significantly impacts productivity. Proper organization of resources, both physical and human, allows for better coordination and higher output.
Technological Change and Capital Investment
Improving machines and tools can dramatically increase production. From the invention of printing to modern computer systems, technological advancements have revolutionized almost all sectors.
Key Concepts in Production
- Potential Output: The maximum goods and services that can be produced over a period, using all resources efficiently.
- Efficiency: The use of available resources, given technological levels, to achieve the maximum possible output.
Elements of Production Constraints
Nations with abundant natural resources can potentially produce more goods. Similarly, nations with a good supply of capital goods (machinery, tools, transportation) have greater production potential. The organization of production factors, such as dividing work into tasks, also influences the final result. Technology, worker training, and good business organization can all increase production.
Economic growth reflects an increase in a country’s total output, achieved by increasing production factors and improving productivity.
Economic Sectors
The primary sector includes activities that extract natural resources directly: agriculture, livestock, fisheries, mining, and forestry.
The secondary sector involves transforming raw materials into finished products: industry, energy, and construction.
The tertiary sector provides services to the population or other companies, including transport, trade, tourism, hospitality, insurance, financial services, and healthcare.
Sector-Specific Insights
- Primary Sector: Modernization of farms has restructured agricultural activities, requiring less manpower. Productivity has increased worldwide, but has not eliminated shortages in poorer countries. The workforce in the primary sector is much higher in poor countries than in rich ones.
- Secondary Sector: Industrial activities contribute to wealth and employment. All developed countries have undergone industrialization. The labor force in this sector ranges from 35% in middle-income countries to 26% in high-income countries.
- Tertiary Sector: This sector is very diverse, with a large labor force. The cost of tertiary activities is often driven by worker wages. In developed countries, up to 70% of the workforce is in this sector, with an average of 54% and 45% in other countries.