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Difference between Production and Productivity

Every factor and industry produces several products that we use in our daily lives. These products help us in doing the daily chores. Both factories and industries manufacture goods that help people with a variety of things. But why is production/ manufacturing important? Well, manufacturing helps in modernizing agriculture. This, in turn, helps in strengthening the economic status of the country. Secondly, manufacturing helps in reducing poverty and unemployment in the country. Manufacturing is an important part of the economy.

Today, we will discuss about the two terms that are quite the same. They are production and productivity.

Both seem to be the same. But there are some differences between them. So, let us have a look at the primary definitions first.


Production is defined as the process of producing goods from raw materials. The raw materials and immaterial inputs are used for manufacturing a variety of products. The products manufactured contribute to the utility of the individuals. There are three significant stages of production, i.e., the total product, marginal product, and the average product. Now, there are four prominent factors of production through which goods and services are produced. They are land, capital, labor, and entrepreneurship. Other factors include factories, machinery, tools, raw materials, enterprise, etc. These factors help in making the economy strong.

Apart from all the factors of production, software and professional services have become extremely important in the modern world. Along with this, labor is considered to be the most crucial factor of production because, without labor, manufacturing and production are not possible. Besides labor, the land is considered to be the most abundant factor because it is used for agriculture. Capital is one of the rare/ scarce factors of production. Capital is not available in abundance, and people are not able to arrange it. Therefore, capital is not easily available to people.

Well, there are three major kinds of production, i.e., batch production, flow production, and job production. In batch production, the groups of several items are made together. In flow production, identical items are manufactured. Finally, in job production, the products are manufactured separately. Every good is finished before the next product is started.

The primary objective of production is to produce a good quality of products for the economy. The products manufactured must be of the right quality and quantity by using minimum cost and effort.


Productivity is defined as the process of producing goods and services efficiently. Productivity is often measured through the ratio of aggregate output to the single output. In layman's language, productivity is defined as the ratio between input and output. Productivity measures how the factors of production (land, labor, entrepreneurship, and capital) are utilized. Productivity is essential for the economy because, with the growth in production, more goods and services will reach the general public, thereby bringing efficiency to their lifestyle. There are different kinds of productivity, like capital productivity, labor productivity, material productivity, total factor productivity, etc.

Apart from the major types, there are several ways of increasing and improving productivity. They are:

  • Tracking the time that has been spent on manufacturing goods.
  • Taking regular breaks during the production.
  • Arranging meetings for short-term and long-term goals.
  • Quit multitasking.
  • Setting up self-imposed deadlines in order to increase the efficiency of an individual.

Efficiency is the key factor in increasing production. Once the labor of the company is organized, it becomes easier to achieve the company's goals. Now, how do we calculate productivity? Well, one formula has to be kept in mind in order to calculate productivity, i.e., total output/ total input.

Now, there are certain differences between production and productivity. So, let us have a look at them.

1. Production is defined as the process of producing goods from raw materials. On the other hand, productivity is defined as the process of producing goods and services efficiently.
2. The production focuses on the availability of the factors of production, i.e., land, capital, entrepreneurship, and capital. Productivity focuses on the ways these factors of production are utilized.
3. The land is the key factor of production. Efficiency is the key factor of productivity.
4. A production is an act of creating something. Productivity is the act of calculating the products produced.
5. Production is undertaken to produce goods. Productivity is used for adaptation.
6. Production controls the output value. Productivity controls the formation/ production issues.
7. The production represents the number of products produced. Productivity represents the ratio of output to input.
8. Production is the process of conversion. Productivity is the process of utilization of the available resources.
9. Production is expressed in absolute terms. Productivity is expressed in relative terms.
10. The production helps in fulfilling the needs of the customers. Productivity helps in increasing and improving productivity.

So, these are some of the contrasting points regarding production and productivity. Both are essential to run a business. Production and productivity are the building blocks of the economy that help in making the nation and its citizens independent. Both of them help in achieving the short-term and long-term goals of the company. Thus, both production and productivity are significant aspects of a business.

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