Factors of Productivity Improvement

Productivity improvement is the result of a combination of FOUR factors, namely

1. Accumulation of Human Capital
2. Innovation
3. Accumulation of Physical Capital
4. Business environment 

The interaction of above FOUR factors that are related to Productivity Improvement

(1) Accumulation of Human Capital
 Human resources are the key to productivity improvement. Formal education, training and non-formal approach, to optimize the human capital, are essential for Innovation factor.

(2) Innovation
For sustained competitiveness it is important that a nation is innovative. Policy makers at all levels and in all sectors of the economy will have to think out of the box to improve on process, products and market positioning with respect to Productivity Improvement.

(3) Accumulation of Physical Capital
The most obvious and universally accepted factor influencing Productivity is Capital. But it adds value by being combined with other factors.

(4) Business Environment
High rates of public investment in human capital will not pay off unless a nation's microeconomics circumstances create the demand for skills in companies. The company skills and supporting industries are present to make investment efficient and strong competitive pressures and adequate corporate governance provide the needed market discipline. For sound policies at the macroeconomics level to translate into an increasingly productive economy, then parallel microeconomics improvements must take place.