Productivity & Growth: How many bricks can you carry on your head?

This activity is designed for principles courses. Students are expected to have covered key macroeconomic measures: real GDP, nominal GDP, and GDP per capita. Prior to the activity, students should be introduced to fundamental growth models (e.g. Solow growth model) and concepts related to diminishing returns.
There are no class size limitations.
The in-class portion of this activity may take an estimated 20 minutes. This activity should take just one class period.

The activity has pre-class work that should take students about 15 minutes using the Just in Time Teaching (JiTT) format.

Overview

In this activity, students will contrast productivity & wage differences between brick makers in the US and Bangladesh through short videos. Students will then identify factors for why workers in the US are more productive than in Bangladesh.

The purpose of this activity is to identify factors that increase labor productivity and how that drives economic growth, tying in concepts of diminishing returns to capital and convergence.

Expected Student Learning Outcomes

Students will be able to define productivity and identify fundamental drivers of economic growth.

Information Given to Students

Pre-Class Work (JiTT)* (see teaching notes)

In-Class Exercise:

Below are salary comparisons between workers in the US and Bangladesh. These salaries can serve as a proxy for labor productivity differences:
- Workers in Bangladesh (often children) are paid around $1.50 to $3 to transport 1000 bricks, which would be around $750 per year.*
- US Brick makers have an average annual salary of about $30,000.*

After watching the videos of the brick industries in Bangladesh and the US, which factor would you consider to be most important for why a worker in the US can make more bricks per hour than a worker in Bangladesh?

A) Infrastructure & capital: wide paved roads for transporting bricks & bigger/better machinery.

B) Innovation & entrepreneurship: innovators considering how to combine resources in unique ways to get more bricks.

C) Stable financial institutions: ease and ability of taking loans to purchase start-up equipment like machinery and/or to fund innovation.

D) Natural Resources: The local availability of the raw materials for making bricks.

E) Work ethic & skills: American workers work much harder and are more skilled than workers in Bangladesh, and the difference in their wages is justified based on the work ethic and skill differences.

Pre-Class (JiTT) work:
Watch the three videos linked below, taking note of how many workers and how much machinery you see, as well as the surrounding area infrastructure. Videos can be watched at faster than normal speed, as per your preferences:
* Fun teaser video: Carrying bricks on head (Bangladesh): https://www.youtube.com/watch?v=_8HyTyTbS5A&ab_channel=Veritasium
* How it's made: Bricks (Bangladesh) https://www.youtube.com/watch?v=ux11MSDtT70&ab_channel=AbdusSamadSadi
* "How it's made: Bricks" (The US) https://www.youtube.com/watch?v=SbKvhHzn4hQ&ab_channel=IanCollier

As you watch the videos, please answer this question in 1-2 sentences:
What factors do you think allow for a worker in the US to produce more bricks per hour compared with a worker in Bangladesh?
(Answer: From the videos, one might see that brick-making in America is a lot more capital-intensive than in the Bangladesh context. Also, infrastructure is much more well built).

Prefatory Remarks:
1) Hook: How many of you have been to a developing country? Where did you go and what was your experience?
2) Tie in: Should we as economists care about productivity and economic growth of other countries? (absolutely, lifts people out of destitute poverty in some cases, gives people more opportunities)
(Could show data for productivity by country):
https://worldpopulationreview.com/country-rankings/most-productive-countries

Explanation of each answer response:

Productivity is integral in economic growth. The Solow growth model framework is touched upon in the answer responses, important components being capital, labor, and total factor productivity (TFP).

A) Importance of "Capital." The more capital per worker, the more output per worker (the greater the productivity), and the Solow growth model predicts diminishing returns.

B) Importance of "TFP." Classically "technology," which improves productivity and growth (shifting up the production function in the Solow growth model).

C) Importance of "TFP." Institutions are crucial to growth, which can be included in the TFP category. This could also lead to a discussion of the importance of savings/investment & the financial system to both capital accumulation and/or innovation.

D) "Misconception." Although natural resources are important, the framing of this question is meant to address the misconception that resources must be local to be useful or cost-effective. This can lead to a discussion of the importance of "openness to trade" in acquiring needed resources.

E) "Misconception." This touches on human capital, but the framing is meant to address a misconception that poor people in developing countries are poor because of a lack of work ethic. This is predominantly not the case.

Answer: The most defensible answers are (A), (B), and (C), with (D) and (E) addressing possible misconceptions. Productivity and subsequent economic growth are complex, and it often takes multiple factors occurring concurrently to be successful.

Follow-up questions:
1) Draw the Solow growth model with "capital per worker" on the x-axis and "output per worker" on the y-axis. Where would you consider Bangladesh to be relative to the US?
2) Which country might have greater returns from adding more machinery to the brick making process?
3) Which country do you think devotes a greater percentage of their labor force to brick making?
4) What implications does that have for the economy as a whole? (if more people are making bricks in Bangladesh than in the US as a percentage of the labor force, then fewer other goods would be made available in their economy).
5) How much do you think the brick making industries in both countries reflect the broader economies (i.e. are other industries as heavily mechanized in the US as the brick industry)?

Sources:
1) Bangladesh wages for brick carrying: https://blogs.dw.com/womentalkonline/index.html%3Fp=30557.html#:~:text=They%20are%20paid%20100%2D120,them%20to%20the%20brick%20depot.
2) US Brick maker salary: https://www.comparably.com/salaries/salaries-for-brick-maker

An essay exam question:
Imagine the government has $1 trillion to spend, and could do the following 3 things with that money:

1) Fund research & development projects in a variety of sectors (tech, health, transportation etc).
2) Repair physical infrastructure (roads, bridges etc).
3) Pay people to dig ditches and fill those ditches up again.

What impact would each of these options have in the short run in regards to employment and real output? Write one or two brief sentences for each of the three options.

What impact would each of these options have in the long run in regards to real economic growth? Write one or two brief sentences for each of the three options.

Two multiple choice exam questions:

Assume a country's strategy for growth is to devote nearly all funding toward physical infrastructure (e.g. more and more roads and train tracks). According to the Solow growth model, what is expected in terms of economic growth for this country?
A) Output per worker is expected to rise, but at a diminishing rate.
B) Output per worker is expected to rise at a constant rate.
C) Output per worker is expected to fall, but at a diminishing rate.
D) Output per worker is expected to fall at a constant rate.
(Correct Answer: (A))

2) Assume the US has more capital per worker than Mexico. Using the Solow growth model and holding all else constant, if both countries devote proportionally equal resources toward more capital accumulation, what is expected to occur?
A) The US should experience lower output per dollar spent on capital than Mexico because of diminishing returns to capital.
B) The US and Mexico should experience similar output per dollar spent on capital since spending is proportional.
C) The US should experience higher output per dollar spent on capital than Mexico because the US has better infrastructure in which that capital will be put to use.
(Correct Answer: (A))

The world bank is a useful resource to compare real GDP and growth data across countries over time. Below is a link to Bangladesh's GDP per capita as an example:
https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG?locations=BD

Other data sources are included in the "Teaching Notes" above.