A new study by the MAPI Foundation provides compelling statistical evidence on the importance that capital investment and educated labor have on productivity performance.
The study analyzed productivity growth in a range of manufacturing subsectors over the past 25 years. In particular, the study looked for ways that manufacturers who have already invested in capital equipment can increase productivity and innovation.
Produced by Cliff Waldman, director of economic studies at the MAPI Foundation, and sponsored by Rockwell Automation, a global leader in industrial automation, the study offers evidence that innovation and capital investment play a significant role in driving multi-factor productivity growth (i.e., output per unit of a combined set of inputs including labor, materials, and capital) in a wide range of manufacturing subsectors. The research indicated that capital investment is the mechanism by which productivity-enhancing innovation spreads through companies, supply chains, and the broad economy.
The research offers several critical conclusions:
- Machinery and transportation equipment subsectors have shown relative productivity improvement, but not yet enough to replace the decline of computer subsector productivity
- The economy’s supply of educated labor plays a definitive role in driving labor productivity growth across diverse subsectors