ABSTRACT
The chapter demonstrates how productivity can be influenced by existing power relations, the role political settlement plays in this regard and how the endogeneity of politics affects the advancement of the whole process. There is negligence of how the state, underwritten by appropriate political settlement, plays an active role in ensuring and maintaining high rates of investment and the shift to higher productivity-inducing technology acquisition, catching-up and deepening. This chapter contributes to the debate and shows that productivity in factors of production—labour, capital and technology—are brought about through the endogeneity of political settlement or social property relationships, and informal institutions, as understood in terms of the nature and distribution of power in a given society. It utilises instruments such as technology acquisition and organisational capabilities to determine the level of productivity contributed by the role of fiscal policy. In the context of COVID-19, developing countries may choose use to these instruments to boost productive economic sectors and induce effective policy responses to improve productivity.
