This chapter essentially deals with the interplay of productivity and competition, where aspects of globalisation are discussed. The productivity of a production unit is defined as the ratio of a measure of output produced by this production unit over a measure of input used during the same time period. If the input measure is comprehensive, then the productivity concept is called Total Factor Productivity (TFP) or Multi Factor Productivity (MFP). A problem with the Multi (Total) Factor Productivity concept is that it depends on the units of measurement for outputs and inputs. Hence MFP (TFP) can only be compared across production units if the production units are basically in the same line of business so that they are producing the same (or closely similar) outputs and using the same inputs. Therefore, we concentrate in this chapter on firms as production units operating in the manufacturing market.
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