US Natioinal Security & the Domestic Economy

Productivity may mean many different things, depending upon the context in which the term is used. With the contin uing advances in manufacturing technology, the multifactor productivity concept is probably the most valid measure. Multifactor productivity is the ratio of output per unit of labor and capital inputs combined, which enables the productivity ratio to reflect changes in a number of factors (such as technology, shifts in labor force composition, capacity utilization changes, research and development, work force skills and effort, and management quality) which affect the production process (Kendrick, 1990).

Output may also be measured in terms of the quantity of products and services produced. In one sense, this approach is superior to the use of value as stated in constant prices. The use of a valuebased measure incorporates monetary factors and product sale prices into the productivity equation. Such factors tend to distort the productivity of workers. On the other

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892.6 bil +13.8% + 3.5 bil 96.1% 1985 950.3 bil + 6.0% 1.061 tril +18.9%  110.7 bil 32.6X 1986 1.071 tril +12.7% 1.341 tril +26.4%  269.2 bil + 2.4X 1987 1.168 tril + 9.0% 1.536 tril +14.6%  368.2 bil +36.8% 1988 1.297 tril +11.0% 1.770 tril +15.2%  473.3 bil +28.5% 1989 1.402 tril + 8.1% 2.050 tril +15.8%  648.1 bil +36.9% (International Monetary Fund, 1990; Council ofEconomic Advisers, 1990) =============================================================== As the data presented in Table 2 indicate, the growth in the value of US assets abroad slowed significantly in the 19831985 time period, and the improved growth rates subsequent to 1985 have not recovered to pre1983 levels. By contrast, the growth in the value of foreign assets in the US slowed only slightly in 1983 and 1984, and, with the exception of particularly strong growth in 1986, maintained annual growth between 14.6 percent and 19.0 percent in all other years. The combined effects of these differing rates of growth led to the transformation of the US from a creditor to a debtor country. The character of the American external deficit, as well as its magnitude, must be considered. In the case of developing
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Approximate Word count = 3348
Approximate Pages = 13 (250 words per page)