Search results for "productivity trap"

Productivity dynamics and the productivity trap: problems and solutions in Latvia

2019

By analysing changes in productivity and labour costs in Latvia from 2013 till 2017, we can see that growth of labour costs exceeds the growth of productivity by more than 2 times in both, tradable sector and total economy. Slow growth in productivity compared with the labour and other production expenses lead to an increase in the price of final goods and services, which negatively corresponds with producers’ competitiveness in both internal and external market. Furthermore, this leads to a drop-in consumption of domestic production and inefficient production facility usage, resulting in declining economic growth rates. The rapid growth in labour costs is mainly associated with the tight s…