Structural productivity

Structural productivity
See also
Capacity analysis Value added statement Activity measure Productivity report Threshold productivity Integrated measuring system Added value chain Workforce productivity Theory of constraints

Structural productivity is a relation of final result of particular activity to the cost of performing this activity. Here you need to take into account the presence of settlement keys. They are used to divide the final result on each type of activity. This takes into account the principle of appropriateness of cost for i-th activity and its share in final results. Therefore, it is recommended that the primary settlement key was the productive cost indicator, since it points to the economic use of resources.

Applications

The structural productivity index (SPI) is a measure of the productivity of an economy that takes into account the structure of the economy, including the relative importance of different sectors and industries. The SPI is calculated by comparing the actual level of output in an economy to the level of output that would be expected if the economy were perfectly efficient.

The following are some of the key applications of the SPI:

• Assessing economic growth: The SPI can be used to measure the efficiency of an economy over time, and to identify areas where the economy is underperforming or overperforming relative to its potential.
• Identifying structural changes: The SPI can be used to identify changes in the structure of an economy, such as shifts in the relative importance of different sectors or industries.
• Benchmarking performance: The SPI can be used to compare the performance of different economies and to identify best practices and areas for improvement.
• Evaluating the impact of policy: The SPI can be used to evaluate the impact of different policies, such as trade agreements or tax policies, on the efficiency of an economy.
• Targeting investment: The SPI can be used to identify areas of the economy where investment is needed to improve productivity and achieve greater economic growth.
• Identifying areas for efficiency improvement: The SPI can be used to identify areas of the economy where efficiency can be improved, and to prioritize investment and policy decisions accordingly.
• Assessing the impact of external factors: The SPI can be used to measure the impact of external factors such as a crisis, war or natural disasters on the economy.

In summary, the structural productivity index is a useful tool for measuring and evaluating the efficiency of an economy, and for identifying areas where productivity can be improved. It is widely used in the academic, government and private sectors for economic and policy analysis.

The computational formula

$P={S_{n} \over {\sum KM_{i}}}$

$P_{i}={S_{n_{i}} \over KP_{i}}$

where:

• P - general structural productivity
• P_i - structural productivity of i-th type of activity
• KM_i - cost of i-th activity
• S_ni - sales revenue settled on i-th type of activity.

This indicator can be interpreted as a measure of ability to produce effects, since a single factor can create complex manufacturing effect. The purpose of the productivity calculations is to evaluate the productivity of manufacturing factors of each type of activity. Productivity can have also the diagnostic function and inform of existence of synergistic effect.

Examples of Structural productivity

• One example of structural productivity is the productivity of a manufacturing plant. This is calculated by looking at the cost of the resources used to produce a product, such as the raw materials, energy, and labor, as well as the level of output and the quality of the end product.
• Another example of structural productivity is the efficiency of an IT system. This is calculated by looking at the cost of hardware, software, and staff resources that are used to support the system, as well as the level of uptime and the amount of data that can be stored or moved.
• A third example of structural productivity is the performance of a transportation network. This is calculated by looking at the cost of the infrastructure, vehicles, and staff resources that are used to support the network, as well as the speed of delivery and the number of passengers or loads that can be transported.

Advantages of Structural productivity

Structural productivity is a method of evaluating performance in regards to the cost of resources used. It has several key advantages:

• It allows for the efficient use of resources by providing a comparison of the cost of each activity to the final result. This helps to identify areas of inefficiency and provides an opportunity to make changes in order to achieve greater productivity.
• It takes into account the principle of appropriateness of cost for a specific activity and its share in the final result. This helps to ensure that resources are used optimally and that the cost of each activity is in line with the expected results.
• It allows for the evaluation of activities on an individual basis, giving an accurate indication of the performance of each activity. This allows for a more comprehensive assessment of the performance of an organization.
• It allows for the identification of areas for improvement and allows for the implementation of changes to increase the productivity of the organization.

Limitations of Structural productivity

Structural productivity has certain limitations when used as a measure of performance. These include:

• It does not consider qualitative aspects of output. Structural productivity only looks at the quantifiable results of an activity and does not take into account the quality of the output.
• It does not take into account the efficiency of the processes used to generate the output. Structural productivity only looks at the output and does not measure how efficiently the work was completed.
• It does not account for the cost of resources used in the process. Structural productivity does not take into account the cost of the inputs used to generate the output.
• It does not consider the externalities of the activity. Structural productivity does not take into account the environmental or social effects of an activity, which may affect its value.

Other approaches related to Structural productivity

• Activity-based costing (ABC) – This approach is used to identify the cost of production related to a specific activity. It involves analyzing individual activities and assigning costs according to the resources used or consumed.
• Lean management – This approach focuses on making processes more efficient by reducing waste and increasing value. It involves identifying areas of non-value added activities and reducing or eliminating them.
• Performance measurement – This approach involves measuring performance in terms of output, cost, and quality. It is used to identify areas of improvement and to ensure that resources are used efficiently.
• Process optimization – This approach involves analyzing processes to identify areas of improvement. This might include streamlining processes and identifying opportunities to reduce costs or improve output.

In summary, Structural productivity is a relation of final result of particular activity to the cost of performing this activity. Other approaches related to Structural productivity include Activity-based Costing (ABC), Lean Management, Performance Measurement and Process Optimization. These approaches are used to identify areas of improvement and ensure resources are used efficiently.

References

• Baumol, W. J. (1986). Productivity growth, convergence, and welfare: what the long-run data show. The American Economic Review, 1072-1085.