Productivity Theory

Productivity theory explains how the efficiency of producing goods or services depends on how effectively resources like labor, capital, and technology are used. It suggests that as these inputs are combined, improved methods and innovations increase output per unit of input. Essentially, higher productivity means achieving more results with the same or fewer resources. This concept helps analyze economic growth, business performance, and standard of living, emphasizing the importance of technological advancement, skilled labor, and efficient processes in driving prosperity.