Global productivity climbed sharply in the past 25 years, thanks in part to 30 “fast lane” economies—meaning those that could reach advanced-economy productivity levels in the next quarter century. Senior partner and McKinsey Global Institute chair Sven Smit and colleagues explain that some regions have achieved rapid progress since 1997: China demonstrated the highest growth rates and boosted output from $6,000 per worker to more than $40,000, while Central Europe doubled its output per worker to $80,000. Increasing capital per hour accounted for up to 80 percent of overall productivity growth across all regions.
Image description:
A scatterplot shows the relationship between productivity level and growth, per employee, 1997–2022, in regions around the world. The y-axis represents productivity growth as an annual percentage; the x-axis represents annual productivity level in thousands of US dollars. Data are categorized by countries and geographical regions, with a trend line showing varying rates from 1997 to 2022, marked by different start and end points. On the left are countries and regions with high productivity growth but low wages, including China, India, and emerging Asia. On the right are those with low productivity growth but high wages, such as North America and Western Europe. In the middle are Central Europe, Eastern Europe, Latin America, and the Middle East.
Note: Weighted averages for 11 regions in 21 rolling 5-year periods; n = 242.
Source: Total Economy Database, “Output, labor and labor productivity,” The Conference Board; McKinsey Global Institute analysis.
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To read the report, see “Investing in productivity growth,” March 27, 2024.