Productivity Growth
Definition
The rate at which a firm increases its output relative to its inputs over time. Productivity growth is a key indicator of operational efficiency and long-term competitiveness, closely linked to investment in intangible assets such as technology, training, and process improvement.
Complementary Terms
Concepts that frequently appear alongside Productivity Growth in practice.
A measure of productivity that accounts for the contributions of multiple inputs — including labour, capital, energy, and materials — to output growth. MFP captures the efficiency with which all inputs are combined and is closely related to total factor productivity, serving as a key indicator of innovation and intangible capital contributions.
The amount of output produced per unit of labour input, commonly measured as gross value added (GVA) divided by labour costs or number of employees. Labour productivity is a key efficiency metric that reflects the quality of human capital, processes, and technology deployed by a firm.
A measure of productivity that captures the effects of technology, innovation, management quality, and other intangible factors that increase output beyond what can be explained by the quantity of labour and capital inputs used. TFP is calculated as GVA divided by a weighted combination of labour and capital inputs.
An analytical framework that decomposes economic or firm-level output growth into contributions from labour, capital, and a residual factor often interpreted as technological progress or total factor productivity. Growth accounting is fundamental to understanding how intangible investments — in R&D, software, organisational design, and human capital — drive productivity improvements.
The process of projecting a company's future growth trajectory based on historical data, market conditions, and investment patterns. Incorporating intangible asset data and productivity trends significantly improves forecast accuracy and reduces investor uncertainty.
The annualised rate of return that smooths out growth over multiple years, calculated as (ending value / beginning value)^(1/years) minus one. CAGR is used to compare growth trajectories of companies or metrics across different time periods.
The percentage change in a metric from one year to the next, used to assess trends while neutralising seasonal effects. YoY growth rates in revenue, productivity, and intangible asset investment are fundamental to performance evaluation, valuation modelling, and growth accounting analysis.
The percentage increase in a company's revenue over a specific period, typically measured year-over-year or quarter-over-quarter. Revenue growth rate is a fundamental measure of business expansion, market traction, and the effectiveness of go-to-market strategy.
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