Pursuing a national vision for a prosperous Virgin Islands means adopting an understanding of the country’s capital mix – land, human resources, and technology- its wealth generating assets, as the tool of change.
GDP is insufficient as a measure of productivity in an economy. Productivity – the human effort in the capital mix- drives the specific outcomes that achieves a country’s vision.
Now, GDP – Gross Domestic Product- is a useful economic measure. GDP measures output in terms of all of the products and services of the various sectors of the economy. GDP is the value of all the goods and services produced in the Virgin Islands in a single year. GDP evaluates economic cycles and activities within a fixed period. GDP compares present and past economic cycles, and then economists and statisticians evaluate that information in an attempt to answer specific questions and offer reasons to why the economy behaves in a specific manner.
However, GDP does not measure a country’s wealth generating assets, only the products generated by a country’s capital mix. Productivity on the other hand, speaks to the human effort in producing goods and services. Productivity is the human element in the capital mix. GDP and productivity are different things, albeit both subjects link to each other.
Now, how do the value and supply chains – the flow of the capital mix- of each economic sector affect GDP? GDP is not the measure of productivity in an economy, as GDP fails to measure sufficiently the intangible – invisible- resources that drive wealth such as culture, learning and human effort.
One measure of Productivity is national output divided by labor hours. However, this measure is uncertain and ambiguous in my opinion. This is a traditional productivity measure that does not evaluate productivity sufficiently enough to make the measure meaningful.
Then there are the asymmetric – external- factors that hinder a labor force no matter how efficient the symmetry – straight-line order- in the value supply chains. Asymmetric factors such as poor weather, fiscal and monetary anomalies, and war, stifle GDP. That does not mean the workforce of the country is inefficient. Ukraine is an example of asymmetric factors devastating the economy.
GDP measures the total value of products and services produced in the Virgin Islands in terms of revenue only; however, GDP cannot measure productivity effectively, even with knowledge of hours worked in relation to GDP and the unique culture of the workforce.
Productivity is more than rent or revenue earned from this or that economic sector of the Virgin Islands over a specific period. Productivity is the human effort that drives up or down the country’s GDP: its prosperity. Productivity is action focused on achieving specific economic outcomes.
Pursuing productivity is more important to achieving prosperity than simply gazing at increasing GDP.
Dickson Igwe is an education official in the Virgin Islands. He is also a national sea safety instructor. He writes a national column across media and has authored a story book on the Caribbean: ‘The Adventures of a West Indian Villager’. Dickson is focused on economics articles, and he believes economics holds the answer to the full economic and social development of the Caribbean. He is of both West African and Caribbean heritage. Dickson is married with one son.
