Productivity to the Rescue: Review Article on the McKinsey Global Institute Report Global Growth: Can Productivity Save the Day in an Aging World?

This review article provides a synthesis and critical assessment of the McKinsey Global Institute (MGI) report Global Growth: Can Productivity Save the Day in an Aging World? The key stylized fact that motivates the report is the expected fall-off in GDP growth for the G19 and Nigeria from an average annual rate of 3.6 per cent in the 1964-2014 period to a projected 2.1 per cent in the next fifty years (2014-2064). All of this slowdown is due to a fall-off in employment growth and none to slower labour productivity growth. MGI believes that there is great potential to accelerate productivity growth to offset the fall in employment growth and prevent any fall-off in GDP growth. Indeed, the report makes the case that it is feasible, although extremely challenging, to boost productivity growth in the G-19 and Nigeria to 4 per cent a year over the next decade, largely through catch-up to best practices. The report outlines public policies and private sector actions to achieve this target. IT IS WELL RECOGNIZED that in recent