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The conditions essential for growth in labor productivity is usually created by money, markets, companies, and property rights.This is known as an incentive system. These institutions help people acquire returns with the assistance of trading and specialization.

Initiation of Industrial Revolution in Britain during the 1700s (probably mid-century) was due to secure property rights. In many African parts in current scenario, absence of this right is still keeping this labor productivity in astagnant position.

If conditions helping in this growth of labor productivity followa constant pace, it initiates a certain effect which in turn affects this pace by,

  • Technological advances
  • Physical capital growth
  • Human capital growth