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New research by the McKinsey Global Institute (MGI) examines the growth challenge facing the United States and explores how U.S. business and government can contribute to the economy's renewal by reinvigorating their drive toward higher productivity.

As baby boomers retire and the female participation rate plateaus, the U.S. economy will receive significantly less lift from increases in the labor force and will have to rely increasingly on productivity gains to fuel growth. The report finds that the United States needs a 34% acceleration in productivity growth if it is to match the GDP growth rates of the past 20 years—and that this is possible.

Three-quarters of the necessary productivity growth acceleration can come from the efforts of private-sector companies operating within the current regulatory and business environment. Even the best-performing companies and sectors still have headroom to boost productivity by emulating the best practice of others and tapping into new innovations, and coming up with new innovations of their own. The remaining one-quarter—and more—can come from government and business working together to address barriers that now limit growth.

MGI lays out a seven-point agenda for action to spur productivity.