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What Is The Competitive Nature Of Productivity?

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The competitive nature of global enterprise drives firms to produce high quality goods and services and pushes them to offer these goods and services at a fair market value price. From time to time, one concern that is overlooked is the long run growth of firms’ production possibilities, which can be driven by advancements in technology, investment in capital stock, and the daily projection of human capital frontiers, to name a few (Stiroh). However, productivity, an amount of output per hour of work, is a big contributor to firms’ expansion (BLS). In 1998, American economist Paul Krugman wrote, “Productivity isn’t everything, but in the long run it is almost everything” (The Age of Diminishing Expectations). Economists must recognize…show more content…
The more important aspect of the PPC, however, is the ability of the curve to shift outward. This visual expansion represents something much more profound: true growth and effective maximization of resources. A website from Professor Elizabeth Dunne Schmitt of the State University of New York at Oswego models the difference between temporary growth versus permanent growth by examining the PPC. She explains that moving from any point inside the PPC to any point closer to or directly on the PPC itself represents temporary growth. She goes on to show that permanent growth is characterized by an outward shift of the PPC as a whole. Dr. Schmitt describes, “Only this type of growth produces lasting increases in output and living standards . . . Productivity gains come from several sources: increase in human capital, increase in physical capital, technological advances, and better use of resources.” This source affirms that educating the workforce, increasing investment spending on capital goods, developing better production techniques, and improving management of existing resources will elicit more efficient “production with . . . [an unchanged quantity of] resources.”

My views concerning the growth of firms have changed after completing AP Macroeconomics. Previously, I did not recognize that there are differences between short-term and long-term benefits. I believed that there were many ways for a
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