New Horizons in Management series
In order to assess the psychological impact of the economic crisis, it is essential to take one step back and shed light on how we have reached where we are today. By getting to grips with the origin of this global crisis and by fully understanding various world events that unfolded, a greater and more solid vision can be established. This is necessary because any world economic crisis not only means economic misfortune, but also psychological turbulence in the world of work occurs simultaneously. It could be suggested that at the most superficial level, the rate of growth of any economy is by definition the sum of productivity growth and workforce growth, the latter of which appears to have been neglected or pushed aside dramatically in this current world recession. However, beginning nearly two centuries ago, the true determinants of economic growth were outlined in the Primitive Production Function model (as cited in Strategic Economic Decisions, 2010), which clearly included the workforce as a key determinant factor in the equation. More specifically, the output of an economy began to be interpreted via a simple theory in which existing technology transformed the three basic factors of production into output. These three ‘input’ factors were land, workforce and capital.
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