Productivity of Lisavia

As the economic advisor of Lisavia, I believe that the president first needs to understand the four main determinants of productivity, if he wants to increase productivity in his own country. The first is physical capital. This means that a country must possess structures, tools, equipment and machinery to efficiently produce the goods and services. Second, is human capital. Citizens should be properly trained and educated according to their respectable industry as to increase production. The third determinant is access to Natural Resources. The firms of Lisavia must have access to the valuable natural resources needed to increase productivity. And finally, Technological knowledge is important. Awareness and understanding of technology used to produce goods and services is key. Now let us first discuss how to implement proper physical capital. Lisavia needs the proper equipment and machinery to efficiently improve production. To do this, the president should possible offer decreased tariffs on the importation of machinery into his country. This will allow for firms outside of Lisavia, who produce the necessary machinery, to import these tools at a lower cost on trade, and in turn, the people of Lisavia will enjoy the benefits of high production. We need to consider that the population of Lisavia is not yet trained in the usage of such machinery and equipment. This means that the president should enact a government sanction training program, where the people of Lisavia can become educated and trained to use these new tools. As an incentive for people to participate in the training programs, the president should allow for a tax deductible on federal taxes for each citizen who participates. Also, to increase and maintain the productivity of its newly trained and educated citizens, the government of Lisavia should implement a universal healthcare system. This will provide the people of Lisavia with the access to medical necessities to stay healthy and