Friday, 12 August, 2022
HomeThePrint ValueAd InitiativeDr. Yasam Ayavefe details the causes and effects of low productivity increase

Dr. Yasam Ayavefe details the causes and effects of low productivity increase

There are differences between productivity measures using value added and those based on production. Many differences may also come from other sources, such as the existence of cost savings.

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There has been a gap in productivity growth in the United States and the United Kingdom since the mid-1990s. The possible causes were examined one by one, and it was concluded that ICT has an important role.

These would represent generic technology in the United States. Investment in these technologies can be combined with investment in, for example, training and organizational-
related intangibles.

This makes it possible to accelerate productivity through the overhaul of production processes. The absence of such a phenomenon in the UK can be explained by subsequent investments in ICT.

Researchers dispute the existence of the General-Purpose Technology effect. According to them, there is a reason for the difference in productivity growth in the United States and the United Kingdom.

It is linked to the sharp decline in the contribution of capital intensity to productivity growth in the non-ICT sectors in the UK after 1995.

The reliability of the data in question is to create a data that allows for international productivity comparisons.

Outsourcing and increased productivity

From 1993 to 2001, attempts were made to establish production-based accounts and thus to identify sources of productivity. A voluminous sectoral database on productivity was created in Germany by IFO.

The authors say that it is not possible to take sectoral value added as an approximate measure of gross output. Because this leads to an overestimation of TFV. The two measures of TFP by value added or production differ according to the importance of imported inputs in production.

There is a relative gap between growth in output and value added and between the two measures. This is explained by international subcontracting processes, in which imported inputs have increased significantly in German production.

There are differences between productivity measures using value added and those based on production. Many differences may also come from other sources, such as the existence of cost savings.

Only in the absence of such a phenomenon will the authors’ hypothesis be correct. In the case of Spain under study, only three sector economies of scale are presented. This puts the weight of this criticism in perspective.

Economic growth of Japan and the United States in the information age

Japanese national account data, specifically GDP, is adjusted at around 20,000 billion yen (150 billion euros), or 3.7 percent. The aim is to make it comparable to the American data obtained.

The components of growth are then analyzed using the standard growth accounting approach and a capture model. (Production probability limit approach)

Thus, the end of Japan’s catch up with the US in the late 1990s would not be due to lower gains in TFV. Because, on the contrary, it will increase more in Japan than in the USA.

The results will be largely the same in both countries. However, it will contribute to the slowdown in the quality of work and the replacement of labor by non-ICT capital.

These results would be similar to those of the available literature on the subject, except for the contribution of TFV to Japanese growth, which has traditionally been estimated at much lower levels.

There is a need to very carefully specify the sources and creation methods of the data.

The general discussion has a link to the previously presented work. The arrest of the United States is not due to differences in TFV gains, but it confirms the idea that it will be due to differences.

Click on the below links to view Dr. Yasam Ayavefe’s projects:
https://greenclimate.io/
https://yasamayavefe.com/

(ThePrint ValueAd Initiative content is a paid-for, sponsored article. Journalists of ThePrint are not involved in reporting or writing it.) 

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