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The McKinsey Global Institute Productivity Studies: Lessons for Canada

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  • Matt Kellison

Abstract

The McKinsey Global Institute (MGI) is a think tank based in Washington, D.C. founded in 1990 with the objective of analyzing international productivity levels from both economic and management perspectives. MGI uses microeconomic analysis on a sector-by-sector level to study the effects that industry decisions ultimately have on national productivity. For the most part the productivity drivers identified by MGI can be grouped into three broad areas: competitive factors (concentration, trade protection, deregulation, minimum wages, work rules, and zoning laws); managerial factors (best practice, human capital, capital intensity, and information technology); and demand factors (average income, cyclical factors, and consumer preferences). This paper examines these factors in an attempt to shed light on the causes of Canada-U.S. productivity differences at the industry level. Competitive factors may explain the poor productivity performance of the Canadian financial and cultural service industries relative to their U.S. counterparts, and likewise may explain the high productivity levels of some natural resource industries in Canada relative to the United States. Managerial factors, especially the implementation of new technologies and related processes, may be important in explaining the poor productivity growth in Canada relative to the United States in service industries such as retail trade. Given the similarities between Canada and the United States, the findings of the MGI studies cannot be indiscriminately applied to Canada-U.S. productivity differences at the industry level. However, the MGI studies do put forward a number of useful working hypotheses for analyzing these differences.

Suggested Citation

  • Matt Kellison, 2004. "The McKinsey Global Institute Productivity Studies: Lessons for Canada," CSLS Research Reports 2004-10, Centre for the Study of Living Standards.
  • Handle: RePEc:sls:resrep:0410
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    File URL: http://www.csls.ca/reports/csls2004-10.pdf
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    References listed on IDEAS

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    1. Thomas Ross, 2004. "Viewpoint: Canadian competition policy: progress and prospects," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 243-268, May.
    2. Someshwar Rao & Jianmin Tang & Weimin Wang, 2004. "Measuring the Canada-U.S. Productivity Gap: Industry Dimensions," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 3-14, Fall.
    3. Martin Neil Baily & Jacob Funk Kirkegaard, 2004. "Transforming the European Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 353.
    4. Martin Neil Baily & Eric Zitzewitz, 2001. "Service Sector Productivity Comparisons: Lessons for Measurement," NBER Chapters,in: New Developments in Productivity Analysis, pages 419-464 National Bureau of Economic Research, Inc.
    5. Lewis, William W., 2004. "The Power of Productivity," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226476766.
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    Cited by:

    1. Andrew Sharpe, 2007. "Lessons for Canada from International Productivity Experience," International Productivity Monitor, Centre for the Study of Living Standards, vol. 14, pages 20-37, Spring.

    More about this item

    Keywords

    Productivity; Productivity Growth; Industry; Industry Studies; McKinsey Global Institute; MGI; Concentration; Competition; Retail Trade; Wal-Mart; Regulation; Banking; Airlines; Best Practice; Deregulation;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • P12 - Economic Systems - - Capitalist Systems - - - Capitalist Enterprises

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