Labor Productivity in Developing CountriesFor Slideshare 1.pptx

Educational Lecture

1. Labor Productivity in Developing Countries

2. OUTLINES

3. 1. INTRODUCTION

4. Background of the Study Economic growth and development is inevitable for survival and sustainability of communities in countries. The research in the area of economic growth is generally based on some generally accepted theory or model within framework of economic growth. There are many such theories of which a few play vital role in in the existing research on economic growth. These economic growth theories include: Neoclassical Theory of Economic Growth and Endogenous Theory of Economic Growth . The neoclassical theory is attributed mainly to the works by Robert Solow (1956 and 1957) and Trevor Swan (1956). The Endogenous growth theory is attributed mainly to the works by Arrow (1962), Romer (1986), and Lucas (1988). “Solow-Swan Growth Model” is most popular and simplest version of the Neoclassical Growth Model.

5. The OECD (2008), (The Organization for Economic Co-operation and Development) states that “Economic growth is the most powerful instrument for reducing poverty and improving the quality of life in developing countries.” Concepts of productivity in the context of economic growth are well established in past literature. Productivity is a ratio of total volumes of input and output of an activity or a project. Total factor productivity is an aggregated form of productivity that includes weighted averages of both capital productivity and labor productivity. Productivity growth is a rate of change in overall productivity. Measure of labor productivity is based on hourly output of a country's workforce employed. The OECD uses GDP per hour worked as a measure of labor productivity that gauges how efficiently labor input is combined with other factors of production and used in production process.

6. Statement of the Problem Desirable economic growth and development depend on availability and utilization of sufficient levels of both capital and labor and accomplishing that usually proves to be challenging for majority of the countries. Foremost challenge facing most countries, especially those with developing economy, is to ever reach an ideal situation of capital that further generate serious productivity obstructions leading to lags in economic growth. Most feasible resolution to this problem lies in alternative approach of improvement of labor that would definitely lead countries to a lesser challenging path to economic growth and development. Research should be directed towards developing the understanding of role of labor productivity in growth and development of economies.