Table of Content

1. Abstract
2. Introduction
3. Objectives of the Study
4. Problem Statement
5. Literature Review
6. Methodology
6.1 Data collection and Analysis
6.2 Regression Analysis
6.3 Analysis of Real GDP measure
(Hypothesis testing)
6.4 ANOVA Table
6.5 Correlation
6.6 P value
7. Findings and Recommendations
8. Limitations of the study
9. Conclusion

10.Referances
Abstract
The manufacturing public enterprises have now begun to realize the significance
of enhancing labor productivity with the emerging environment of competition
and liberalization. The ever-growing process of globalization, the open-door
policy to imports, and the obvious shift to buyer's market have thrown new
demands and challenges on these enterprises. Given these opportunities and
challenges provided by the emerging realities, the enterprises have now to match
markets with products and other corporate resources more effectively and
efficiently to strengthen their competitive advantage. In the current
manufacturing environment purchases and personnel expenses (labor) are
representing the major proportion of total input. Generally, labor productivity
refers to the quantity of output produced by a given quantity of labor input. The
laborers are the key determinant of the total value added. More precisely labor
productivity is often used as a test of industrial efficiency and even as an index
of economic development of a society. Labor productivity is, therefore, fully
concerned with the efficient use of labor, so that optimum outputs and benefits
could be achieved. Productivity had also suffered because of the failure of the
management to adjust to the changes taking place within the workforce. In
managing human resources, leadership styles, and motivational systems had not
kept abreast of these changes. Furthermore, the negligence to improve and
monitor employee productivity and taking corrective actions are evident.

Introduction
Growth accounting is a procedure used in economics to measure the contribution
of different factors to economy Growth and to indirectly compute the rate of
technological progress, measured as a residual, in an economy Growth
accounting decomposes the growth rate of an economy's Total output into that
which is due to increases in the contributing amount of the factors used—usually
the increase in the amount of capital and labor and that which cannot be
accounted for by observable changes in factor utilization. The unexplained part
of growth in GDP is then taken to represent increases in productivity (getting
more output with the same amounts of inputs) or a measure of broadly defined
technological progress.

The Growth Accounting Equation is a financial tool that measures economic

growth – specifically, how changes in real Gross Domestic Product (GDP) in an
economy are influenced by changes in available capital, labor, and technology.
The Growth Accounting Equation facilitates analyzing economic growth at the
minutest level. It enables one to break down economic growth into various
components at the micro level and, thus, gives a very accurate measure of the
economic growth of a nation.

Growth Accounting Factors

While the growth accounting equation can seem somewhat simple, identifying
the data factors and calculating it can be tedious. The Conference Board (CB) can
help as it provides an annual breakdown of economic growth accounting by
region.

Below is a look at the growth accounting factors along with one-year data results
for a nation, Investopedialand.

GDP: Investopedialand's annual GDP was $20.5 trillion while the GDP growth
rate was 2.90%.

Capital: Adding capital to the economy should, among other things, increase
productivity. Capital investment is of key importance to the growth accounting
equation. Capital investment was $3.65 trillion for a capital contribution of
17.82%. Capital investment grew from $3.25 trillion at a growth rate of 13%.

Labor: Labor looks at the number of people employed to identify a growth rate.
Typically, more workers will generate more economic goods and services. In
Investopedialand, the labor market for full-time workers grew from 125.97
million to 128.57 million or 2.06%. Its weight is identified by subtracting the
capital weight, considering that capital and labor are the only two factors. Thus,
labor would have had a weight of 82.18%.

Technology: In the growth accounting equation, technology is a third residual

factor. Cutting-edge technology can bring many benefits, including facilitating
greater output with the same stock of capital
Objectives of the Study
The basic objective of the study is to assess the labor productivity of the
manufacturing public enterprises in Bangladesh. This objective has been divided
into the following specific sub-objectives:

1.To study the level of productivity awareness among the employees of these
enterprises;

2.To assess the planning, improvement, implementation, measurement, and other

critical factors of labor productivity programs; and

3. To suggest recommendations for the improvement of labor productivity in

these enterprises.

Labor productivity measures the efficiency of a country with which inputs are
used in an economy to produce goods and services and it offers a measure of
economic growth, competitiveness, and living standards within a country.

labor productivity affects everyone. For businesses, increased productivity brings

higher profit and opportunity for more investment. For workers, increased
productivity can translate to higher wages and better working conditions. And in
the longer term, increased productivity is key to job creation.

Problem Statement
Developing countries like Bangladesh are using labor in production. And human
capital investment is a necessary condition for improving labor productivity.
Empirical studies to investigate labor productivity and its linkages on the labor
demand side. With this view the following research problem of this study:

1.Lack of training and higher education: Education is one of the main

elements which leads a countries development. The literacy rate of Bangladesh
is about 62% and it is improving day by day but there is a shortage of skilled
manpower. For this reason, labor productivity cannot improve effectively. For
increasing Labor productivity, have to provide proper training and provide best
facilities for higher education. Higher education and service training has a
statistically and significantly positive impact on an increase in labor productivity
growth rate which helps to increase GDP growth rate. Cognitive skills and non-
cognitive skills in information technology is found to be the most important
cognitive skill for increasing labor productivity.

2.Lack of technology:

The use of technology can accelerate a countries economic development. The

developing countries are using modern technology everywhere but developing
countries like Bangladesh are using labor- intensive technologies in production.
They can produce only a few products compare to a developed country.

3.Productivity awareness:

In Bangladesh lack of productivity awareness demotivate the labor and the labor
are not fully capable to think the workplace is their own productivity.

4.Proper planning:

The plans which are made by respective authority is not good enough to
implement those plans. So, fail to achieve desired progress and decrease GDP
rate.

5.Capital shortage:

Due to capital shortage, there is a lack of sufficient investment. Low investment

turns lower productivity in industry and agriculture.

6.Underdeveloped of Industries:

Although there are unlimited natural resources and huge manpower in the
Bangladesh industrialization process is slow here because of lack of capital, low
skilled manpower, infrastructure and planning.

7.Political instability:

Political instability, social peace and discipline are the pre-condition of a

country’s economic development. The political movement has an effect
economic development and GDP growth rate.
8.Lack of entrepreneurs:

In this country, there is a shortage of entrepreneurs. People are hankering after

jobs. Entrepreneurs can earn foreign currencies, create employment for the labor
and provide facilities and motivate them in workplace.

Literature Review
There is extensive empirical literature on the factors affecting labor productivity.
In most studies the dependent variable is labor productivity and the independent
variables are physical capital, labor and knowledge capital. In this section each
of these variables and because of their influence on labor productivity will be
introduced.

* Education and Training: The important role of human capital in productivity

growth is widely recognized in the economic literature since the seminal
contributions of Schultz (1961), Becker (1964), Welch (1970) and Mincer (1974).
According to the human capital theory, human capital contributes to output just
like other factors of production and also through technological change by driving
both innovation and imitation (Aggrey et al, 2010). Corvers (1997) discusses four
effects of human capital on labor productivity: the 'worker effect', the 'allocative
effect', the 'diffusion effect' and the 'research effect, he argues that human capital
contributes to productivity level through allocative and worker effect, and
productivity growth through diffusion and research effects. Corvers (1997)
introduce these effects as follow:

. The worker effect or 'own productivity' effect;

his effect has been explained by Welch (1970). He assumes that firms produce
only one good with the production factor education, and that other resources are
given. The worker effect refers to the positive marginal productivity of education
with respect to that particular good. Workers with a higher level of education are
assumed to be more efficient in working with the resources at hand, i.e., these
workers produce more physical output. In other words, education increases the
effective labor input from the hours worked. Therefore, a better educated labor
force shifts the production possibility curve outwards.

. The Allocative effect; Points to the greater (allocative) efficiency of better

educated workers in allocating all input factors to the production process
(including education itself) between the alternative uses. Welch (1970) gives two
examples of the allocative effect. If there is one fixed input factor to produce two
goods, education may improve the total revenues of firms by means of a better
allocation of the input factor between the alternative outputs. Although the
production process is technically efficient because the firm produces on the
production possibility curve (expressed in physical units), workers have more
knowledge of how to maximize the marginal value product (expressed in money
units) of the input factor.

. The diffusion effect; Stresses that better educated workers have more ability to
adapt to technological change and will introduce new production techniques more
quickly. Nelson and Phelps (1966) state that "educated people make good
innovators, so that education speeds the process of technological diffusion" (see
also Bartel and Lichtenberg, 1987). Moreover, Nelson and Phelps (1966) stress
the role of receiving, decoding and understanding information in performing a
job.6 A higher level of education increases the ability to discriminate between
more and less profitable innovations and reduces the uncertainty about
investment decisions with regard to new processes and products.

. The research effect; refers to the role of higher education as an important input
factor in research and development (R&D) activities. R&D, in turn, is a key factor
for technological progress and productivity growth (see, e.g., the endogenous
growth models in Romer, 1990 and Grossman and Helpman, 1992). Since R&D
activities are very complex, a relatively large proportion of intermediate and
highly-skilled workers are a prerequisite to increase technological knowledge and
achieve productivity growth.

*Knowledge capital Knowledge capital accounts for changes in productivity,

which occurs because of new technology applications. In many studies,
knowledge capital is the accumulated and still productive research capital derived
from previous R&D expenditures [Griliches (1986), Hall and Mairesse (1995),
Del Monte and Papagani (2003)]. In other studies, [Rogers and Tseng (2000)],
"knowledge" is interpreted to include past investments in innovation,
organizational techniques and human capital, in addition to R&D investment
[Rogers and Tseng (2000)].

*Firm export status Based on existing studies there are two major reasons for a
positive influence of firm export status on labor productivity:
Firstly, firms that export their products due to transport costs, marketing,
distribution and etc. must have lower domestic price in order to determine a price
commensurate with their costs and willingness to pay of foreign buyers for their
exporting products. In other words, extra cost for sales in export markets will be
as a barrier to prevent nonefficient firms’ entry.

*Firm ownership Many economists believe that productivity and efficiency in the
private sector is higher than public sector:

1. Government agencies have goals other than profit maximization.

2. Management objectives in government agencies are often vague and not

specified.

3. Ease of access to financial recourses by most of these firms leads to lack of

financial discipline (Fraquelli and Erbetta, 2000).

*Wage Level Based on models of wage-efficiency, the wage rate above the
market clearing level will increase labor productivity.

Methodology
This research is qualitative in nature but quantitative methodology also has been
chosen. This section we discuss the data sources and statistical analysis which we
are going to use.

Here we give clear view about Denison’s sources of growth model also discuss
about how it applies in implications of growth accounting in Bangladesh.

A number of studies for United States have done by Denison. He has identified a
number of sources of growth and estimates the portion of the growth rate
attributable to each. He divides the sources of growth into four important
categories;

I. The contribution of two factor of production i.e., labor and capital, adjusted for
quality changes but not depend on technical change.
II. Advancement in knowledge, which is a true measure of total factor
productivity (TFP), obtained as a residual.

III. Resource allocation improvement

IV. Economies of scale

Measurement of Sources of Growth: Empirical Explanation

In his study The Sources of Economic Growth in the U.S., Denison estimated the
contribution of different resources with the help of Cobb-Douglas type
production function. He kept all inputs together. He took two factor inputs, labor
and capital. He derived an index of the stock of inputs on the basis of a particular
base year, 1929. In order to construct this index, he took data of different inputs
and multiplied them with their relative contribution to output which were
estimated by the relative shares of income in the base period. In calculating the
contribution of education to output, Denison treated workers of different
educational categories as different inputs. Then the growth rates of the number
of workers in different educational categories were aggregated into an index of
the growth rate of total labor input according to their shares of total labor hours.
From the 2-factor input of Denison's Sources of Growth model we use labor. We
show relation between labor productivity increment and GDP increment.

In this study we have used only secondary data. The secondary data will be
collected from the organizations as well as publications such as journals,
newspapers, magazines, books, internet, and from other studies taken up by
government or other independent organizations. We have also taken three
hypotheses for testing in order to know the relation between independent
variables and dependent variable.
Data collection and Analysis

We Have collected secondary data from World Bank national accounts and
OECD national accounts data files report 2020

Labor GDP
Productivity Growth Predicted GDP
Year Growth Ratio Ratio Growth Ratio
2007 4.123 7.100 6.298485093
2008 3.291 6.130 6.205341253
2009 2.921 5.150 6.163919113
2010 2.261 5.570 6.090030971
2011 5.172 6.460 6.415922458
2012 5.213 6.520 6.420512479
2013 4.700 6.010 6.363081241
2014 4.376 6.060 6.326808881
2015 4.920 6.550 6.387710622
2016 5.532 7.110 6.456225081
2017 0.675 6.590 5.912475527
2018 5.446 7.320 6.446597232
2019 6.107 7.880 6.520597326
2020 5.763 3.450 6.48208593
2021 4.585 6.940 6.350206792

Predicted GDP Growth

Ratio = 5.837+ 0.11195× Labor Growth Ratio

According to the Denison’s model, we determine the predicted GDP growth rate
from 2007 to 2020. In this table, we assume that labor productivity is the
independent variable and GDP growth rate is dependent variable. We see that the
predicted GDP growth rate up-down but very narrow. Also, how shows labor
productivity affects GDP.

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.157
R Square 0.02465
Adjusted R
Square -0.0504
Standard Error 1.08199
Observations 15
Multiple R means the relationship between the labor productivity and GDP. In
this table we see that Multiple r value is 0.157, which indicates that the positive
relationship between labor productivity and GDP.

R square indicates correlation between labor productivity and GDP growth,

which value is 0.024565. It shows the Homoscedasticity.

Adjusted R square is -0.0504, which indicates Heteroscedasticity. Negative value

reflects not good fit.

Regression Analysis:

The regression analysis is a technique of studying the dependance of one variable

(called dependent variable), on one or more variable (called independent
variable), with a view to estimating or predicting the average value of the
dependent in terms of the known or fixed values of the independent variable.
Labor Productivity Growth Ratio Fit Plot

In this graph shows correlation between GDP growth and predicted GDP
growth. In this regression table, the GDP growth shoes rate up-down and the
predicted value is average percentage. As a result, we say that there are 15%
relationship between GDP growth and predicted GDP growth rate.

Analysis of Real GDP measure (Hypothesis testing)

This section assesses the available data with respect to the predetermined
hypothesis.

Let,

H0; There is significant relationship between Lobar Productivity Growth ratio

and GDP Growth Ratio.
H1; There is significant relationship between Labor Productivity Growth ratio
and GDP Growth Ratio.

ANOVA
Significance
df SS MS F F
Regression 1 0.384624723 0.38462 0.32854 0.576301812
Residual 13 15.21926861 1.17071
Total 14 15.60389333

F-Test

F test is any statistical test in which the test statistic has a F distribution under the
null hypothesis. The F test of overall significance is regression is a test of whether
or not the linear regression model provides a better fit to a data set than a model
with no predictor variables.

The purpose of F-test is to determine whether two samples have different

variances. Here, F- test shows about 32% variability between independent
variable and dependent variable.
P-
Coefficients Standard Error t Stat value Lower 95%
1.9E-
Intercept 5.83691 0.892335142 6.54116 05 3.909135237
Labor Productivity Growth -
Ratio 0.11195 0.195315822 0.57318 0.5763 0.310002451

Also, ANOVA shows that that P value is 0.5763 or about 57% and the level of
significant 0.05, p<0.05.

So, the null hypothesis is accepted and the alternative hypothesis is rejected.
That’s means there is significant relationship between Lobar Productivity Growth
ratio and GDP Growth Ratio.
Finding and Recommendations:

Agricultural development
The increase of food production will fill up food deficit problem and agricultural
development will increase the standard of living of rural people. Agricultural
production will increase by modern technology, use better fertilizer and hybrid
seeds, expansion irrigation and food control.

Capital Accumulation
Investment can increase production in agriculture, industry and service sector. To
increase investment Bangladeshi people should start savings and the government
of BD should cooperate on profitable investments.

Rapid Industrialization
It is impossible to get developed badge without industrialization. Industrialization
can fasten urbanization and use natural resources. Job opportunities will create
for working force and they will lead a better life. RMG is doing better here.

Use of Natural Resources

This country has lots of fertile lands, water resources in the river, natural gas and
other mineral resources. But Bangladesh is unable to full utilization of those
resources. The best utilization of those resources will increase employment and
production.

Population Control
Economic development will not be easy unless the growth rate becomes slower.
Bangladesh should create awareness on family planning program. As a result, per
capita, income will increase.

Technical Education
The education rate of common people should increase. The government should
implement a technical education system, training everywhere. If every people
took technical education, they will become an asset to our country.

Full Employment
Full employment is necessary for a developed country. We should create
entrepreneurs in all sectors to employ all working people. Labor-intensive
industries should get high priority.
Skilled worker
Skilled laborers can increase production and able to complete his job in a short
time. Although this country has a huge unemployed person, there is a shortage of
skilled labor. So, we import laborers from foreign countries.

Developed infrastructure
The infrastructure of our country is not good enough. We should build up new
roads, buildings, airports, waterways and repair the existing ones.

Anti-Corruption commission
Corruption is the main problem for a developing country. To accelerate the
development process, corruption should be eradicated from this country.

Proper planning
Proper and effective planning is the key to economic development. The plan
should be made by the expertise and the government should implement those. For
the rural sector there must have a rural development plan.

Equal distribution of resources

Only a few people are the owner of most of the resources of Bangladesh. So, the
number of poor people and poverty is increasing. This is not good for socio-
economic development. Equal distribution of resources and wealth ensures socio-
economic development.

To ensure economic development all economic problems must be solved.

Effective plans must be formulated and implemented.

Moreover, there is a need for mutual collaboration of public and private

institution to train. The study has studied the relationship between the labor force
participation rate for both male and female, gross fixed capital formation, and
economic growth in Bangladesh. The results find two bidirectional nexus that one
is. The government of Bangladesh needs to give more importance in technical
education format that will produce labor force about technological knowledge.
The government should also manage a flexible one-digit interest rate for the small
entrepreneur that will promote the gross fixed capital formation strongly. More
importantly, the public and economic growth whereas the findings also show a
unidirectional causal association from female labor force significant negative
indication on the economic development.
Limitations of the study
An economy can grow when the number of workers increases (i.e. employment
increases) or when each worker produces more. Labor productivity measures the
latter effect.

Changes in labor productivity shows whether output is increasing or decreasing

per worker and is often used in wage settlements to compensate workers for
productivity improvements. Growth in labor productivity is the key to higher
living standards as a country can sustain real wage increases without losing
competitiveness, only if labor productivity grows.

Labor productivity relates output to the number of workers employed. It does not
measure the specific contribution of labor alone. Rather, it reflects the joint
effects of many factors, including new technology, capital investment, health and
skills of workers and the use of more efficient management and production
practices. For labor productivity calculation, Number of worked hours would be
a more Accurate and thus a more recommendable Measure of labor input than the
number of Employees (Number of persons employed). However, Eurostat uses
the latter in the calculation Of Apparent labor productivity, due to much better
data availability.

The downward trend of labor productivity in the EU-28 mining and quarrying
industry in.

The period 2007-2021was due to a significant reduction in value added, in spite

of a parallel.

Reduction of number of persons employed. Leaving aside electricity, gas, steam

and air.

Conditioning generation sector, the EU-28 mining and quarrying industry had the
highest.

As also emphasized in OECD (2008), “it is generally accepted that the total
number of hours worked is the most.
Appropriate measure of labor input because a simple headcount of employed
persons can hide changes in average.

Hours worked, caused by the evolution of part-time work or the effect of

variations in overtime, absence from work.

Conclusion
Manufacturing environment purchases and personnel expenses (labor) are
representing the major proportion of total input. Every year population are
increasing dramatically. Even though unemployment rate is increasing. We have
summarized the differences among our estimates of the rate of growth of total
factor productivity The main reason behind this young people don’t go for stating
a business. Even though people wait for 30 years for finding a government job.
The people of Bangladesh are not skilled in technology. At the time of covid 19,
people sit in the inside of the home. At that time, people give interest to work at
home. People were getting knowledge about technology at that time. From a
conceptual point of view the greatest difference among alternative

procedures are in the allocation of income from property among its components.
Except for our assumption that replacement requirements should be estimated by
the double declining balance formula, our estimates of capital stock for each class
of assets are very similar to Denison's estimates. Our estimates of capital input
differ very substantially from his due to differences in treatment of the tax
structure for property income, the use of real rates of return balances than nominal
rates for each class of assets, and the use of declining balance

productivity with the emerging environment of competition and liberalization.

Labor productivity affects everyone. For businesses, increased productivity
brings higher profit and opportunity for more investment. For workers, increased
productivity can translate to higher wages and better working conditions. And in
the longer term, increased productivity is key to job creation. So, we can say that
Labor productivity the efficiency of a country with which inputs are used in an
Economy to produce goods and services and it offers a measure of example
competitiveness and living standards within a country. Is to summaries the equal
distribution resources and maintain proper planning to maximum productivity.
And skilled workers and technical education and population control, use of
natural resources, rapid industrialization can be effective for this Research.
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