Background Note | HBS Case Collection | October 1993 (Revised September 1994)

Accounting for Productivity Growth

by Forest L. Reinhardt

Abstract

Introduces students to the arithmetic of the accounting for national productivity growth. It defines labor productivity, capital productivity, and total factor productivity, describes the relationships among them, and discusses the phenomena that cause them to change over time. Exhibits include data for the United States and other industrial countries, which both show the relationships among the various measures and allow comparison across time and space. The end of the note discusses the 1992 controversy over productivity growth in Singapore. Productivity is an important phenomenon, widely discussed in the newspapers, but rarely even defined. Business students, especially those engaged in country analysis, need to understand the various ways in which it is measured and why those various quantities have changed over time in different nations. Intended for an introductory MBA course.

Keywords: Performance Productivity; Macroeconomics; Data and Data Sets; Government and Politics; Mathematical Methods; United States; Singapore;

Citation:

Reinhardt, Forest L. "Accounting for Productivity Growth." Harvard Business School Background Note 794-051, October 1993. (Revised September 1994.)