Higher productivity means higher output per worker, which translates into greater prosperity that can be shared through higher wages and a better standard of living. Cutting costs and working more efficiently are ways of increasing productivity, but in modern technology-based economies, research and innovation are critical to the sustained productivity and growth of a nation's and the world's economy. Advances in computers, telecommunications, and biogenetics are the result of scientific research, experimentation, and testing. These advances occur continuously in market economies as companies seek to develop new products and services, or to produce existing ones more efficiently. This, too, is the same way all workers and businesses in a country can improve their competitive position in the world economy, to raise the material living standards in their nation over time.
International trade can make an important contribution to productivity and prosperity as well.
Think for a moment of Robert and Maria shopping for oranges. Robert is a machinist, skilled and experienced in what he does. Neither would be as productive and efficient in his secondary job as in his primary work. Just as two people are both made better off when they buy and sell from each other and specialize in the production of the things they do best and most efficiently, so too are regions and nations better off when they can specialize and trade freely with each other. When nations trade in the goods and services they make well and at low cost, the benefits accrue to the people in all the countries involved.