Question

How do the level of technology and the quantity of capital per hour worked caused long run economic growth? How is this connected to labor productivity?

Answer 1

Economic Growth occurs in a country when it has the capacity to produce more amount of ; Capital, Labor, Technology and Natural Resources , improvement in technology increases productivity of all such factors. while to accumulate all these factor leads to Economic Growth. Long-term economic growth comes from increses in worker productivity. Labour productivity is the value that all employed worker creates per unit of his/her input. Basically; There are Three factor leads to economic growth of an economy; Accumulation of capital, Labor ( workers or labor -worked) and Technology.

The determinant of labour productivity is Human Capital for eg; Experience, Education & Skills that expertise average worker possessess in an economy. Higher level of education leads to higher level of accumulation of capital and labor productivity in an economy.

Another economic factor connected to Labor productivity is Technological change. which basically combined with invention and innovation to use improving worker productivity by consuming less time, communicate with workers well and measuring quality of a product. Technological progress is the key factor of economic growth. The country cannot aqccuire growth by accumulating more amount of labor or capital only; while other factors remain constant, the additional output obtained when adding one extra unit of input of capital or labor will decline. Technology is the main driver of Long-run Economic growth.