Investing in productivity growth can spur the economic growth that supports higher living standards. Productivity in the median economy has jumped sixfold in the past quarter century, but there is variation.
Thirty emerging economies, home to 3.6 billion people, are in the “fast lane” of improvement. If they maintained their pace, they would converge to advancedeconomy productivity levels within roughly the next quarter century.
“Middle lane” economies would take more than a hundred years, while “slow lane” ones would never converge.
At the same time, advanced-economy productivity has slowed by about one percentage point since the global financial crisis.
Directed investment in areas such as digitization, automation, and artificial intelligence could fuel new waves of productivity growth in advanced and emerging economies, which is the best way to continue improving well-being and prosperity around the globe.
A microscope on small businesses reveals opportunities to enhance productivity. Micro-, small and medium-size enterprises, or MSMEs, are the lifeblood of the global economy. They account for two-thirds of business employment in advanced economies and almost four-fifths in emerging economies, as well as half of all value added. Improving MSME productivity to match top-quartile levels relative to large companies is equivalent to 5 percent of GDP in advanced economies and 10 percent in emerging economies.
Source: McKinsey Global Institute, 2024 in charts