The disparity between rich and poor countries is the most serious, intractable problem facing the world today. The chronic poverty of many nations affects more than the citizens and economies of those nations; it threatens global stability as the pressures of immigration become unsustainable and rogue nations seek power and influence through extreme political and terrorist acts. To address this tenacious poverty, a vast array of international institutions has pumped billions of dollars into these nations in recent decades, yet despite this infusion of capital and attention, roughly five billion of the world's six billion people continue to live in poor countries. What isn't working? And how can we fix it?
The Power of Productivity provides powerful and controversial answers to these questions. William W. Lewis, the director emeritus of the McKinsey Global Institute, here draws on extensive microeconomic studies of thirteen nations over twelve years—conducted by the Institute itself—to counter virtually all prevailing wisdom about how best to ameliorate economic disparity. Lewis's research, which included studying everything from state-of-the-art auto makers to black-market street vendors and mom-and-pop stores, conclusively demonstrates that, contrary to popular belief, providing more capital to poor nations is not the best way to help them. Nor is improving levels of education, exchange-rate flexibility, or government solvency enough. Rather, the key to improving economic conditions in poor countries, argues Lewis, is increasing productivity through intense, fair competition and protecting consumer rights.
As The Power of Productivity explains, this sweeping solution affects the economies of poor nations at all levels—from the viability of major industries to how the average consumer thinks about his or her purchases. Policies must be enacted in developing nations that reflect a consumer rather than a producer mindset and an attendant sense of consumer rights. Only one force, Lewis claims, can stand up to producer special privileges—consumer interests.
The Institute's unprecedented research method and Lewis's years of experience with economic policy combine to make The Power of Productivity the most authoritative and compelling view of the global economy today, one that will inform political and economic debate throughout the world for years to come.
Lewis, founding director of the McKinsey Global Institute and former partner at McKinsey & Company, offers a detailed look at the local economies in several parts of the world including the U.S., Japan, India and Brazil. Based on the Institute's 12-year survey and analysis, Lewis concludes that the great economic disparity between rich and poor countries will ultimately have a negative impact on all nations. Lewis and his team examined individual industries within a country to evaluate the productivity per employee. The specific country-by-country distillations are easily understood, regardless of one's familiarity with economic theory, and readers will not be surprised by Lewis's discussion of the thriving Japanese economy, successful largely because of its domination of the automobile market. However, the more detailed analysis of Japanese business, which is limited by government policy including restrictive land regulations that have kept larger retailers like Wal-Mart away, is quite informative. The author's examination of American domestic productivity is also clear and accessible: in the 1990s, growth occurred in only six sectors, including four technological areas-security brokers, microprocessors, computer assembly and mobile telephone services. As evidenced by the tech bubble, slowed growth in these fields has hurt the economy. Lewis concludes by explaining how various factors, including education, government controls and cooperation among countries, will play a part in future international economic stability. This is an insightful treatment of a complex issue that deserves a wide readership. (Apr.) Copyright 2004 Reed Business Information.