Recap of 1.2.

1 (Production &
Sectors)
Employment by sector in Germany, 1950 and 2015. What sectors are blue, red, and green?

% of GDP in 1950 % of GDP in 2015

1.5
24.6

32.5 24.4

Blue
Red

74.1
42.9
 Recap of 1.2.1 (Production &
Sectors)
Identify which pie chart is representative of Tanzania and Japan in 2015?

% of GDP in 2015 % of GDP in 2015

2.9

32.5 26
.2

Primary
Sec-
ondary
Tertiary
66.9
6.4
70
.9
Recap of 1.2.1 (Production &
Sectors)
Which of the following businesses operate in the secondary
sector?
A) HSBC
B) Cathay Pacific
C) McDonalds
D) Ford Motor Company
 1.2.2 Productivity
and division of labor
Chapter 15, page 108
Learning Objectives

• Definition of productivity
• Factors affecting productivity:
• land – use of fertilizer, drainage, irritation, reclamation
• Labor – quality of labor, including improved human capital through education

and training and impact of migration

• Capital – increased quantity and technological advances
• Definition of division of labor
• Advantages and disadvantages of the division of labor to workers and

businesses
Definition of productivity
Productivity refers to the rate at which goods are
produced, and the amount produced in relation to
the work, time, and money.

Productivity = output per unit of input

Case Study
The main species of coffee grown around
the world are Arabica and Robusta. The
world-famous Kenyan Arabica, which is
mild and high in quality is grown on rich
mountain soils. In Kenya, the climate is
ideal for coffee growing. The temperature
range does not exceed 19oC and the rainfall
is evenly distributed throughout the year.
Kenya’s coffee growing are to be found on
broad and gently rounded hills. The fertile
soil is deep and well drained.
One coffee grower, Bernard Chukwu, is
experienced and successful. In 2015, he
employed 24 workers on his estate and
produced a total of 380 sacks of coffee
beans. However, in 2016, Bernard
introduced a financial incentive for
workers. As a result, production rose to 450
sacks and the number of employed workers
fell to 22.
Case Study
1. Calculate the labor productivity on Bernard’s
estate in 2015 and 2016, and then the change in
productivity across 2015 to 2016.
2. What is the possible reason for the change in
labor productivity on Bernard’s estate?

3. How might farmers improve the productivity of

land? Give two methods in your explanation.
[Research if necessary]
Case Study
1. Calculate the labor productivity on Bernard’s estate in
2015 and 2016, and then the percentage change in
productivity across 2015 to 2016.
Case Study
2. What is the possible reason for the change
in labor productivity on Bernard’s estate?

Between 2015 and 2015, labour productivity at

Bernard’s estate increased from 15.83 to 20.45
sacks of coffee beans, representing an
increase of around 29%. The improvement may
be due the Bernard introducing his financial
incentive scheme.

Even though the work forced decreased from

24 to 22 workers ~8%, the amount of coffee
beans produced increased from 380 to 450
~18.4%. This suggests workers are now
working much harder.
3. How might farmers improve the productivity of land? Give
two methods in your explanation.

The quality of land varies. Some is fertile and can be used to

grow crops. Other land is dry/mountainous and is almost
useless. However, measures can be used to make agricultural
land more productive. For example, fertilisers can increase
crop yields. Pesticides can be used to kill insects or animals
that harm the crops. However, at the same time pesticides
and some fertilisers can harm people, wildlife and the
environment.
3. How might farmers improve the productivity of land? Give
two methods in your explanation.

Another method farmers might use to improve the

productivity of land is to provide it with more water. An
irrigation system might be used which involves redirecting
water from natural resources, such as rivers, lakes or
streams to land which needs more water to become more
productive. In crop production, irrigation is mainly used in dry
areas and in periods of rain shortages but also to protect
plants against frosting.
Factors affecting
land productivity
• Fertilizers and pesticides
• Drainage systems
• Irrigation systems
• Reclamation
Factors affecting Immigrants (% of total
labor productivity population) 2014
100%
90%

• Training 80%
70%
• Improved motivation 60%

• Improved working 50%

practices 40%
30%
• Migration 20%
10%
0%

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Amazon Vs JD.COM – Case
Study
• https://www.youtube.com/watch?v=aTVfbSeeS74

• https://www.youtube.com/watch?v=RFV8IkY52iY

Pick out three specific examples on how technology has increased

JD.COM’s productivity compared to Amazon’s.
Amazon Vs JD.COM – Case
Study
• Assortment Machine – sorting parcels to appropriate size boxes
• Delivery Bot – moving parcels to destination hubs
• Cardboard folding machine / sticker machine

The improvements in productivity new to more capital employed

(new technology) at the expense of human labor. Advances in
technology have helped improve productivity across all three
sectors of the economy!
Factors affecting
capital productivity
• Primary Sector – use of machinery such as
harvesters helped increase output and working
conditions.
• Secondary sector – many factories and
production lines enjoy the increase in
productivity borne from robotization and
automation.
• Tertiary sector – provision of services
historically has been labor intensive. Now with
the use of new technology it is more productive
• Supermarkets – self checkout
• Healthcare – advancement in medicine and
surgical equipment/techniques
Divisio
n of
Labor
Activit
y
Reflective Activity
• Complete the reflection activity sheet
Division of Labor
Division of labor refers to the breaking down of the
production process into small parts with each worker
allocated to a specific task

Specialization refers to the production of a limited range of

goods by individuals, firms, regions or countries.
Pros and Cons to Workers
Pros
• Allows the workers to
become more skilled at
doing that task – practice
makes perfect, so constant
repetition will usually mean
the worker will get better
and better.
• More skilled will likely lead
to higher wages
• Workers may enjoy more job
satisfaction if they are
highly skilled in a specialist
task
Cons
• Workers become bored as the task
is highly repetitive
• E.g. workers on a production line
responsible for an assembly task
that only takes 30 seconds are
likely to get bored if the task is
repeated 120 times per hour, 960
times per day, and nearly 4000
times per week.
• Boredom may lead to job
dissatisfaction and affect
motivation.
• Too specialized may risk
unemployment
Pros and Cons to Businesses
Pros
• Efficiency is improved
through specialization
• Greater use of specialist
tools
• Production time is reduced
because workers do not
have to waste time moving
from one task to another
• Organization of production
becomes easier = structured
system
Cons
• May result in poor quality
work as a result of workers’
dissatisfaction and poor
motivation due to repetition
and boredom
• Production chain is
dependent on the linkage of
previous stage of production
• Specialization may result in
loss of flexibility in
workplace
Homework
• Page 109-112
• Read up on factors affecting Productivity (land, labor, and
capital)