Question

It is no secret that U.S. labor productivity accelerated in the second half of the 1990s. The bulk of the spurt can be traced to the boom in investment information technology capital and to the growth in the information technology-producing part of the economy. Measurement issues abound and having better data would help resolve them. Whether or not the change in productivity is cyclical or structural is too soon to tell. Do you think that US economy will experience higher labor productivity soon? Briefly discuss.

Answer 1

Labour Productivity is the measure of goods and services produced in an economy during the one hour of labour, productivity implies efficiency and efficiency in terms of production increases with the growth of technology, just like the US productivity increased after the second half of 1990's. With the growth of new generation technologies like artificial intelligence, robotic arms, the labour productivity also increased, according to the US Bureau of Labour Statistics the current labour productivity in the year 2018 is 108.86 index points, wheras it was just 63.56 index points during the 1990's. The US Governments policies of safeguarding local manufacturing hubs from foreign competition with countries like china, japan, limiting outsourcing, job creation, imposing countervailing duties helped to stabilize the country's economy. Also governments initiatives for nurturing innovations and supporting enterpreneurs helped to create a wave of technological revolution, now businesses can track the market based on stats, using algorithm trading market risks are minimized, decision making through calculative mechanism using AI, data digitalisation and other e-governance techniques helped in the growth of economy and labour productivity.