Productivity growth once was a sign of technical progress.
It s easy to measure how many hours are needed to produce a car. With the rise of services, problems appear. But what is the productivity of schools, hospitals, lawyers ?
With the rise of imports in industrial products other problems appear.
Some value added disappears in the home country, but if the product is bought cheaper from elsewhere, and if it is an intermediate product, the buyers of that product enjoy a higher value added, hence higher productivity.
So if we replace 100 manufacturing jobs by 100 service jobs, the GDP numbers go false twice.
1 the value added of the services is estimated to be the wages paid, since there is no measuring of the output.
2 the value added of those who buy the foreign intermediate product is boosted because the price paid for it is lower than before.
So may be there is absolutely no real productivity growth but only a better allocation at market prices. what if they change?
2006-11-14
01:33:11
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1 answers
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