Establish links between Productivity and Economic Growth / Development.
Productivity is the output one unit produced from one unit of production input in one unit of time. Economic growth is the value of output obtained with one unit of input. More is the productivity, more is the economic growth and thus both are closely linked. Efficient productivity leads to higher growth. Thus, sustained long-term economic growth comes from increases in worker productivity, which essentially means how well we do things. In other words – how efficient is the country its time and workers?
Generally, low development countries suffer from low level of productivity; and this happens due to absence of many critical conditions that would enable the workers to increase their output – for example, lack of skills, lack of capital and so on. Further, even if the country may have capital, it may not be able to increase its productivity if there is lack of skills. Education may enhance their skill, lead to efficiency and more productivity leading to more economic growth and more development.
What comes in picture here is Total Factor Productivity, which refers to the ability to produce more output with less input. This can be done via skill development and that is why skill development is key to economic growth and reaping demographic dividend.