--- canonical_url: "https://csls.ca/ipm-archive/ipm-issue-35/solving-the-productivity-puzzle-the-role-of-demand-and-the-promise-of-digitization/" title: "Solving the Productivity Puzzle: The Role of Demand and the Promise of Digitization" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-13T07:52:40+00:00" date_modified: "2026-07-13T07:52:40+00:00" post_type: "ipm" summary: "" ipm_issue_period: - "Fall 2018" ipm_keyword: - "2010-2014" - "demand" - "digital economy" - "digitization" - "financial crisis" - "ICT revolution" - "productivity puzzle" - "seven countries" - "six sectors" ipm_research_theme: - "Productivity trends and comparisons" ipm_country_focus: - "Europe" - "International" - "United States" featured_image: "https://csls.ca/wp-content/uploads/2026/06/IPM_50_banner.webp" status: "publish" --- # Solving the Productivity Puzzle: The Role of Demand and the Promise of Digitization Canonical URL: https://csls.ca/ipm-archive/ipm-issue-35/solving-the-productivity-puzzle-the-role-of-demand-and-the-promise-of-digitization/ # Solving the Productivity Puzzle: The Role of Demand and the Promise of Digitization [Download full PDF article](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-35-2-Remes-Mischke-Krishnan.pdf) Cite this article × Cite this article as: Remes, Jaana, Jan Mischke, and Mekala Krishnan. 2018. “Solving the Productivity Puzzle: The Role of Demand and the Promise of Digitization.” International Productivity Monitor, No. 35 (Fall 2018): 28–51. https://www.csls.ca/ipm-archive/ipm-issue-35/solving-the-productivity-puzzle-the-role-of-demand-and-the-promise-of-digitization/ ## Authors: - Jaana Remes McKinsey Global Institute - Jan Mischke McKinsey Global Institute - Mekala Krishnan McKinsey Global Institute ## IPM Issue 35 Fall 2018 pp. 28–51 ## Related IPM articles [Is the SNA Still Useful? 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Krishna, Deb Kusum Das, Pilu Chandra Das Fall 2017 | IPM Issue 33 | pp. 91–113](https://csls.ca/ipm-archive/ipm-issue-33/how-does-the-productivity-and-economic-growth-performance-of-china-and-india-compare-in-the-post-reform-era-1981-2011/) [Recent Trends in Europe’s Output and Productivity Growth Performance at the Sector Level, 2002-2015 Bart van Ark, Kirsten Jäger Fall 2017 | IPM Issue 33 | pp. 8–23](https://csls.ca/ipm-archive/ipm-issue-33/recent-trends-in-europes-output-and-productivity-growth-performance-at-the-sector-level-2002-2015/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn What is behind exceptionally weak productivity growth across many developed economies? We analyze seven countries (United States, Germany, France, UK, Italy, Spain, and Sweden) across six sectors (automotive, technology, retail, electric power, tourism, and finance) and examine supply and demand factors in the period from 2010 to 2014 compared to 2000 to 2004. For each sector, we combine economic analyses with McKinseys industry expertise to shed light on the microeconomic causes behind industry productivity performance. We find three waves collided to drive productivity growth across sectors: the waning of the impact of the 1990s information technology revolution; financial crisis aftereffects, including weak demand and uncertainty; and digital disruption which offers substantial opportunities to boost productivity growth but comes with lags and transition costs. We calculate that the first two waves dragged down productivity growth by 1.9 percentage points across countries since the mid-2000s, from 2.4 per cent to 0.5 per cent. As financial crisis aftereffects recede and more companies incorporate digital solutions, we expect productivity growth to recover, with productivity growth potential of at least 2 per cent per year across countries over the next decade. Qu’est-ce qui explique la faiblesse exceptionnelle de la croissance de la productivité dans de nombreuses économies développées? Nous analysons sept pays (États-Unis, Allemagne, France, Royaume-Uni, Italie, Espagne et Suède) dans six secteurs (automobile, technologie, commerce de détail, énergie électrique, tourisme et finance) et examinons les facteurs d’offre et de demande sur la période 2010-2014 par rapport à 2000-2004. Pour chaque secteur, nous combinons des analyses économiques avec l’expertise sectorielle de McKinsey pour éclairer les causes microéconomiques de la performance de productivité des industries. Nous constatons que trois vagues se sont conjuguées pour freiner la croissance de la productivité : l’estompement de l’impact de la révolution informatique des années 1990; les effets persistants de la crise financière, notamment la faiblesse de la demande et l’incertitude; et la disruption numérique, qui offre des opportunités substantielles mais s’accompagne de délais et de coûts de transition. [Download full PDF](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-35-2-Remes-Mischke-Krishnan.pdf)