This research examines United States (US) national secur ity, as it may be affected by lagging productivity growth in the domestic economy of the US. The topic is examined through (1) a review of trends in American productivity, (2) economic effects of declining productivity growth, and (3) implicationsfor national security of the economic effects attributable to lagging productivity growth.
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 productiv ity ratio to reflect changes in a number of factors (such as technology, shifts in labor force composition, capacity utili zation 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 value based measure incorporates monetary factors and product sale prices into the productivity equation. Such fac tors tend to distort the productivity of workers. On the other hand, in a technologically advanced economy, a productivity measure based only on labor inputs tends to distort productiv ity measures. Further, in the context of international trade, monetary factors and product sale prices are among the major
determinants of export/import levels. Thus, the use of the labor productivity measure with value based outputs introduces some distortion into the productivity ratio, regardless of the objective of the research. For the purposes of this research, however, the distortions are not highly significant.
American ...