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The McKinsey Global Institute Productivity Studies: Lessons for Canada

  • Matt Kellison
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    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.

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    Paper provided by Centre for the Study of Living Standards in its series CSLS Research Reports with number 2004-10.

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    Date of creation: Nov 2004
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    Handle: RePEc:sls:resrep:0410
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    1. Lewis, William W., 2004. "The Power of Productivity," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226476766.
    2. Thomas Ross, 2004. "Viewpoint: Canadian competition policy: progress and prospects," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 243-268, May.
    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. 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.
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