


Productivity and competitivity

Robert Solow, Nobel Prize of Economy, said that the key for balanced growth and productivity lied on innovation.

Productivity and competitiveness:

Productivity does not mean increasing working time, but doing it in a different way and with less resources. In other words, it is the amount of production put into a good or service multiplied by the resources and the time used to produce it. Productivity is a key performance indicator, as productivity rises there will be more employed people and more than 50% of economic growth comes from increasing productivity. Thus, it is quite easy to understand the significance of productivity for companies.

Competitiveness is the ability companies have for making a profit within their segments. Remaining more competitive will mean more profit. Competitiveness does not depend on the number of possessions or access to commodities. Lots of rich countries in natural resources are suffering the consequences of no generating value added and depending exclusively on commodities prices.

As productivity and competitiveness get stronger, it will become easier to face economic upheavals. In this case, the human factor becomes vital, not only from the talent point of view, but mentality, attitude and motivation are also involved.

Currently, countries and companies with the highest competitiveness level of the world are the ones with highest innovation and technology investment with an aim on value added that increases differences.

If artificial demand is produced based upon old models that used to work, like direct public expense without value added, a massive mid-term employment destruction will be possible. This will delay economic and social catching up needed to become competitive and productive.

Competitiveness and innovation:

To become competitive, countries and companies must have innovation integrated in their DNA.

It is not only about investing a high amount of the country’s GDP in R&D, but about making that investment profitable through tangible outcomes like company creation, patents and technological exports. Economic and social prosperity will be possible taking this path.

Countries giving priority to innovation will acquire a short-term impact on investments and strategies. On the long-term, their competitiveness will increase through value added.

Therefore, there is no time to waste. This solution shouldn’t be the last exit.

As World Economic Forum points out, competitiveness general index shows that Switzerland, Singapore and the United States rank on the global top three. Among the top ten there are three Asian countries. This shows how this area is dealing with innovation and how they will become world economic development top countries.

Indice de competitivida global

Considering company creation, key performance and tangible indicator for profit from R&D investment, OECD reflects the next evolution linked to competitiveness index.

creación de empresas

To boost innovation a friendly ecosystem needs to be created removing administrative shackles and fostering tax advantages -no subsidies- for companies investing in competitiveness and technology.

Technology makes productivity, growth and economic and social prosperity more sustainable throughout time. Fostering technological development from education becomes fundamental.

Action must be taken to avoid lost generations.





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