What is the paradox of productivity?
Productity paradox is an economic explanation of how to increase technology does not necessarily mean that productivity will increase. The term was first used by Erik Brynjolfsson, a professor of management at MIT Sloan School of Management when he claimed that correlation between IT improvements and productivity does not exist. He believed that the causes of the productivity paradox are that current productivity measurements are inaccurate, private profits come at the expense of total profits, time delayed to realize that profits and technologies are incorrect.
Productity paradox is important because it shows that investment in technology does not have to help or become more productive. Statistical evidence shows that after a certain level of investment, productivity on a platform will begin as soon as further investments are carried out. This means that after a certain point, businesses should not rely on severe investment in technology if NCREASE is determined. Economists also found that the gross domestic product (GDP) may not beIncreased because the Earth moves to become technological. Although it may be true that paradox of productivity exists, some argue that paradox is due to an inefficient means of measurement of productivity or other causes that do not take into account the calculations.
Methods of productivity measurement are limited and have noticeable weaknesses. Economists usually measure productivity by making a percentage change in GDP and distribute it with a lot of work per hour. The main weakness of this method is that it is only considering technological improvements at a time when the statistics were collected. Businesses tend to use the method of total productivity of factors (TFP), which is calculated by deducting improvement in productivity from income to employees. The weakness of this method is that it assumes technological investments improve productivity, even if it is not.
current methods of productivity measurement may not take into account certain variables whoThey affect productivity due to technology, and profits seem lower. Another potential cause is to look at net profits, because if one trade experiences a profit at the expense of competitors, net profits do not show any changes. It is also possible that profits appear later than expected, so they do not take into account when measured. If management does not use new technology for full potential or has difficulty driving its department, then the expected profits will not be realized.