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How has the industry and service sector reacted to the productivity puzzle?

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Total factor productivity

Multifactor productivity

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The productivity puzzle has led to varied reactions in the industry and service sector. In the UK, the financial crisis resulted in a decline in total factor productivity, affecting labor productivity recovery post-crisis . India's service sector, particularly in ICT-intensive services, has shown substantial labor productivity growth, with a shift towards market services contributing significantly to overall productivity gains . The advent of electronic commerce and Internet technologies has played a crucial role in enhancing service sector productivity by maximizing customer value added and quality improvements . However, challenges persist in measuring service productivity accurately, potentially leading to underestimations of aggregate productivity growth, especially in services with low or negative productivity growth rates . Addressing these measurement issues and leveraging technological advancements are key strategies to tackle the productivity puzzle in the service sector.

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Journal Article•DOI Productivity of services NextGen: beyond output/input Walter Ganz, Inka C. Moerschel, Alexander Schletz, Florian Kicherer - Show less +3 more 22 Mar 2013-Service Industries Journal 8 Citations	The service sector has faced challenges with lower productivity compared to manufacturing, emphasizing the need for improved measurement, investment in education, and innovation systems to enhance productivity.
Journal Article•DOI Service Sector Productivity: B2B Electronic Commerce as a Strategic Driver Elias G. Carayannis, Jeffrey Alexander, John Geraghty - Show less +2 more 01 Oct 2001-Journal of Technology Transfer 23 Citations	The service sector has embraced B2B electronic commerce to enhance productivity, with industries leveraging technology for strategic gains, potentially overcoming the productivity puzzle through innovative approaches.
Journal Article•DOI The Financial Foundations of the Productivity Puzzle Jagjit S. Chadha, Amit Kara, Paul Labonne - Show less +2 more 31 Jul 2017-National Institute Economic Review 6 Citations	The service sector's productivity measurement challenges are highlighted, with financial sector frictions impacting overall productivity. The industry mix of capital and labor influences productivity post-financial crisis.
Open access•Posted Content Productivity dynamics in indias service sector: an industry-level perspective K. L. Krishna, Deb Kusum Das, Abdul Azeez Erumban, Suresh Chand Aggarwal, Pilu Chandra Das - Show less +4 more 01 Oct 2016-Research Papers in Economics 8 Citations	The service sector in India has shown substantial labor productivity growth, particularly in market services like ICT, indicating a positive impact of increasing ICT on productivity dynamics.

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Related Questions

What is the productivity in the food industry?5 answersProductivity in the food industry varies across different countries. Research indicates that countries like Ireland, Denmark, and the Netherlands exhibit high productivity levels due to efficient use of production resources. In contrast, countries like Bulgaria and Romania record lower productivity levels in the food industry. Strategies to enhance productivity include implementing tools like Systematic Layout Planning, Total Productive Maintenance, and Standardization in food manufacturing companies, resulting in significant improvements in production cycle times and overall productivity. Additionally, a study focusing on the Indian food processing industry highlights the importance of analyzing efficiency and productivity determinants, emphasizing the need for efficient management systems to enhance productivity and reduce costs. Overall, productivity in the food industry is influenced by factors like resource utilization, technological advancements, and cost management strategies.

Have the industry and service sector in the UK invested into R and D to improve productivity?5 answersThe UK industry and service sectors have indeed invested in Research and Development (R&D) to enhance productivity. Research shows that R&D has a positive impact on labor productivity in the UK, with different types of R&D showcasing varying levels of productivity gains. Public and private R&D contributions have been estimated to affect UK productivity growth significantly, considering factors like spillovers and industrial structure. Moreover, establishments with substantial R&D activities exhibit higher total factor productivity, indicating the positive relationship between R&D investment and productivity improvement. This highlights the importance of R&D investments in both industry and service sectors in the UK to drive productivity enhancements and economic growth.

What is the cause of the productivity puzzle?4 answersThe productivity puzzle, characterized by a slowdown in productivity growth post-financial crisis, stems from various factors highlighted in the research papers. Misallocation of resources within sectors experiencing rapid technological advancements contributes significantly to the slowdown in productivity growth. Additionally, output mismeasurement, industry effects, and reallocation of labor towards high-productivity industries play a role in deepening the productivity puzzle. The aftermath of the 2008 crisis impacted firm productivity, particularly affecting newer firms in the services sector, leading to a 'levelling down' of performance towards lower-productivity levels. Furthermore, changes in the mix of capital and labor post-crisis, coupled with potential mismeasurement of GDP due to digital activities, have also been identified as factors influencing the productivity puzzle.

How the UK Government have reacted to the Productivity puzzle?5 answersThe UK government has responded to the productivity puzzle, characterized by a significant drop in productivity levels since the 2008 financial crisis, through various measures. The Labour government of 1997-2010 saw good productivity growth compared to international peers, attributed partly to policies focusing on human capital, innovation, and competition. However, the recent productivity slowdown post-2008 has been a concern, with the Bank of England warning of a potential 16% productivity gap if the trend does not improve. Critiques of alternative explanations for the puzzle have been met with responses questioning the empirical evidence supporting these theories. The government's approach has been crucial in addressing the productivity issue, although challenges persist due to factors like changing employment patterns and a growing service-based economy. The historical and contemporary significance of the productivity debate in UK public policy has highlighted conceptual and statistical challenges in formulating effective economic strategies.

How has the industry and service sector in the UKreacted to the productivity puzzle?5 answersThe UK's industry and service sectors have reacted differently to the productivity puzzle. The service sector, particularly newer firms in services, experienced low productivity growth during 2011-2016, with financial services showing a cessation of output growth. On the other hand, the industry sector saw a significant productivity gap post-2009, with weak TFP growth in oil & gas and finance sectors explaining 35% of the TFP puzzle. The collapse in labor productivity growth in the UK was more pronounced in internationally competitive industries dependent on global demand, where productivity measurement is challenging. Factors such as reduced risk-taking in the financial sector, capital shallowing in service sectors, and weak corporate restructuring in manufacturing have contributed to the productivity puzzle.

How do wages affect the productivity of workers in different industries?4 answersWages have a significant effect on the productivity of workers in different industries. Stagnating real wages may contribute to a slowdown in productivity growth. In the manufacturing industry, an increase in wages has been found to positively affect labor productivity, with smaller firms being more affected than larger firms. Additionally, higher wages have been shown to have a stronger relationship with job performance than training and motivation in the manufacturing sector. The relationship between wages and productivity is complex, with theories suggesting that productivity determines wages and vice versa. Overall, it is clear that wages play a crucial role in influencing the productivity of workers in different industries.

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