The wealth of the Virgin Islands primarily depends on the productivity of its workforce. Productivity is simply the measure of human effort that increases a country or territory’s economic output — every other factor being equal.
Productivity is the key measure driving up the value of the VI capital mix. A productive economy possesses a capital mix that achieves optimum outcomes from its inputs of human effort. Examples include customer service, skills and learning, ethics, innovation and so on. Learning and culture are critical to economic productivity
The efforts of VI entrepreneurs, managers, and the skilled and unskilled workforce drives up or down the value of the capital mix. Without the human factor, capital is redundant. Human effort is the most critical factor in the productivity of an economy. But productivity is not easily measured.
GDP increase
The increase in gross domestic product from one year to the next is probably the most appropriate and easily available measure of economic productivity.
Productivity is the human effort that drives the best return from a country or territory’s capital mix: its wealth-generating assets of land, labour, enterprise, technology, and machinery. Productivity increases the value of the goods and services produced. Human effort in the economy is the invisible hand that drives the economic engine.
Now, value and supply chains also drive the VI economy. The value cum supply chain is the combination of the capital mix — especially land, technology and machinery — linked together with the human factors in specific markets that increase in value at each subsequent stage.
The value supply chain increases the value of a specific market at every stage of the trading process from inception until it reaches the consumer. The value supply chain drives the economy to the desired outcome. However, it is human effort that is crucial to the movement of the value supply chain.
The chain drives the VI economy to one outcome or the other. Productivity — human effort — determines the scope, reach and value of the chain.
Policymakers must take both value supply chain and productivity into account when deciding on both public and private investment.
Productivity or human effort applied to capital is the key to increasing VI prosperity.
Questions for the VI
Does the VI, then, know the scope and value of the capital assets sitting in the territory? Is there a list of wealth-generating assets, also known as capital assets? How much of that wealth is in public hands or government? How much is in the private sector?
What capital assets do alien interests own? Is the best use being made of those assets in terms of employment, management opportunities, and profit share for natives? Are the VI’s value supply chains identifiable?
Can the territory’s wealth-generating assets be accurately valued? Which sector of the economy — for example, tourism, financial services, agriculture or internal market — has potential to increase in value, offering greater revenues and greater national prosperity?
One measure of the territory’s wealth-generating assets is the increase in revenues earned from various sectors of the economy. A sector or market is composed of value supply chains.
One traditional measure
Though GDP is another useful economic tool that measures all the products of the various sectors of the economy, does it accurately place value on a territory’s wealth-generating assets?
GDP is not necessarily a good measure of productivity, as GDP fails to measure sufficiently the intangible resources that drive wealth, such as culture, learning and human effort.
Productivity is more than rent or revenue earned from this or that economic sector of the VI. Productivity is the effort that drives up or down the territory’s GDP. Productivity is action focused on achieving specific economic outcomes.
In other words, capital and value chains drive VI prosperity, and productivity is that intangible factor that decides increase in the value of the territory’s capital assets and direction of its value chains. Productivity is the human effort, strategy and vision that derives the best outcomes from those value chains. Productivity is the human effort that drives tourism, financial services and internal markets.
Customer service
In a tourism-oriented economy, customer service is the major component in driving up productivity in the sector. Customer service adds value to the capital mix and value chain that drives tourism and that is in addition to the skills that are required to service the travel industry such as hotel management, culinary, maritime and more. The better the quality of VI customer service the greater, the output from tourism and travel. Productivity is King.