A multinational company has two manufacturing plants, one in Germany and the other in China. Both plants produce the same product, which is sold in their respective countries. By using a partial productivity measure for labor, an analyst for the company finds that the productivities of these two plants are significantly different.

1. Explain some of the possible reasons for the difference.

2. Why might a comparison of the two plants’ productivity using a single factor be misleading?

3. Can you think of another productivity measure that would be more meaningful?