Paul Krugman once said,
“Productivity isn’t everything, but in the long run it is almost everything.”
From a theoretical perspective, this is absolutely true. Every widely accepted model of economic growth from Solow onwards, has at its heart the concept of productivity. While you can get away with just adding inputs like capital or labour to increase output, sooner or later you run into diminishing marginal returns. In the long run then, the only source of real growth is productivity.
Intuitively, productivity is hardly controversial either – the more you make and sell from the same set of inputs, the more profits and wages and earnings you can make. Common sense, right?