Productivity, as an Indicator of the Efficiency of a Country’s Economic System: a Latvian Case

Abstract

The aim of the article is to show the range of issues to consider when developing a country's economic policy for increasing productivity. The relative level of national development over a period of time, on the one hand, is the goal of prosperity for any country and its inhabitants. On the other hand, in an open society, in the larger economic space (EU) of the free movement of people (including goods, capital, etc.), this is a condition for sustainable development. The relative level of socio-economic development of the country, without going into detailed relationships, is characterised by GDP per capita. From a production point of view, the labour force in the productive sectors, whose efficiency is reflected in labour productivity, generates the gross mass of GDP. When deciding on the formulation and implementation of national economic policies, governments face a very significant problem: the assessment of productivity and its interaction with other factors. This is especially important for small countries, such as Latvia. This is not possible if the economic category itself -productivity is not defined with sufficient precision. Productivity is a multi-dimensional concept, which has become one of the basic principles upon which modern economic thinking is based. The concept of productivity includes not only economic factors, but also noneconomic factors such as education, science, political stability and value systems. By creating conditions for productivity increase, a dynamic and systematic approach to creating wealth and long-term economic growth is necessary.