. consumers will save. so it ’ s more money for everyone. of course, a lot of things will have to happen before these are realised and i will talk about this later. but we need to get people excited by saying that productivity equals more incomes and this translates to issues that everyone understands like more food on the table, a shelter over our families head and education for our children. do we have a national vision on productivity? if we do, it is well hidden. let us proclaim this vision from the rooftops so everyone can hear. this week, dedicated to productivity, will help in the understanding of the national vision. let me begin this presentation on a global level. we live in an increasingly globalised world. globalisation and all its side effects is unstoppable. the barriers to trade, capital flows and labour migration are coming down. preferential treatments are being dismantled. in this turbulent world, the nice tradition of love thy neighbour if there was ever one, is now out of the window. you either swim or you sink. and when you sink, the rescue operation will be extremely painful. but do we have a say in these world trends? the answer is no. well, no for small island nations like fiji. not only that we cannot change the direction of these global developments, the platform is not level and the goal post can shift. the rules of the game are influenced by those that possess power and they can change these rules. that unfortunately is the reality of the world. but we must take our place in the sun. we must compete. we must be quick to market and be a reliable source of supply of quality products. in summary, we must do more with what we have. productivity is essential for our future survival in this difficult world. before we can measure productivity we need to know what it is. a basic issue to many but an important one nevertheless. there are technical definitions of productivity which i do not want to bore you with today. very broadly, productivity captures our ability to transform our physical and human resources to generate the desired outputs. in layman ’ s terms, productivity refers to working “ smarter ” and not necessarily “ harder ”. how can we measure productivity? productivity can be measured at various levels - individual, firm and national. tpaf identifies several ways to measure productivity. the traditional way is through profitability and liquidity. the other is value added. measuring productivity at the individual and firm level may be easy

. very clearly from these pictures we can conclude the following : 1. our standard of living measured by per capita income is growing very slowly. it may even be stagnant. 2. our standard of living is not that high compared to some developing countries. some have passed us by. 3. the rate of national development is very low whatever measurement one uses. 4. in summary, our development performance is poor. 5. the rate of development is much less that the target of 8 percent set by the hon. prime minister for the next five years. 6. clearly we must raise this rate of development. we are a small country. not only that, we do not have too many natural resources. we rely on a few commodities for exports. we compete with bigger countries with very low cost structures and higher productivity. we suffer from natural disaster that can easily wipe out a big chunk of our economy overnight. we face the yearly migration of many of our skill workers to australia, new zealand and canada. how can we be expected to survive in this tough world? in economic theory, a country ’ s long term growth depends only on its level of education, technology, innovation and productivity. in fiji, our long term growth is around two percent. we can push this growth rate upwards in the short term but over time, the economic constraints of debt and the balance of payments will pull us back to our long term average. and this is what is happening in fiji now. our growth rate has been rising since 2001 as we kicked started the economy with expansionary policies. but is now falling back to its long term growth level of around 1. 5 percent this year and even lower growth is forecast for next year. our expansionary policy package, while it has brought the country out of our 2000 crisis very quickly, will not be sustainable in the long term unless we introduce structural changes. and productivity is one of these changes. we must of course also work on other issues that will raise long term growth such as education and technology. but as i said, we can achieve results with productivity very quickly compared to the others. productivity means that the firm is producing more from the same resources. unit prices fall. in a competitive market, the firm passes these gains to the consumers. sales rise. profits are better. higher profits means that the firm can afford to raise wages or hire more workers. in this manner productivity contributes directly to more pay and more jobs. national prosperity improves and the standard of life