ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Welcome to the latest edition of Leading Off. We hope you find our insights useful. Let us know what you think at Alex_Panas@McKinsey.com and Becca_Coggins@McKinsey.com.

—Alex and Becca

An IDEA

Understand the keys to America’s competitiveness

As the United States approaches its 250th year, a critical question looms: Can it sustain its edge as the world’s most competitive economy? In a new McKinsey Global Institute report, Senior Partners Olivia White, Eric Kutcher, Kweilin Ellingrud, Shubham Singhal, and Scott Blackburn and their coauthors say America can thrive by drawing on its historical strengths—in particular its culture of innovation and its natural resources. Amid challenges such as mounting national debt, eroding infrastructure, and declining manufacturing, the authors identify five areas for government and business leaders to focus on to maintain US competitiveness:

1. Creating an AI-fluent workforce
2. Sustaining long-term capital investment
3. Expanding power supply to meet the needs of future technology
4. Investing in new and improved infrastructure
5. Enhancing national economic security in a volatile world

“Should those challenges be met, the net effect would be an American economy that innovates and operates in faster, bigger, and better ways,” the authors say.

A BIG NUMBER

$200 billion

That’s how much African governments could generate over the next decade through revenue growth and cost savings by taking measures such as strengthening tax-collection systems and cutting waste in public spending. McKinsey’s Acha Leke, Adam Sabow, Matthews Mmopi, and Tania Holt say that these efforts could “help put public finances in Africa on a more sustainable footing” and build long-term resilience.

A QUOTE

“Latin America has been a land of unrealized potential for more than 50 years. As we see it, the current global shifts present a once-in-a-generation chance to change course.”

That’s McKinsey’s Felipe Child, Javier Valenzuela, Nelson Ferreira, Tracy Francis, and their coauthors on how Latin America may be well positioned for economic growth in the years to come. They note that abundant and cost-competitive renewable energy can enable the region to benefit from the increasingly digital and compute-intensive global economy. In addition, Latin America’s rich, diverse natural resources provide a competitive advantage given rising demand for food, energy, and critical minerals.

A SPOTLIGHT INTERVIEW

Europe is facing a convergence of challenges, including war on its soil, lagging tech adoption, and questions about its productivity and competitiveness. But Philipp Freise, cohead of European private equity at KKR, one of the world’s largest investors in European businesses, is optimistic that the continent can meet the moment. 

In an interview with McKinsey, he points to the broad application of AI across industries as a catalyst for transforming the continent’s economies and improving productivity growth. Access to advances in large language models could unlock benefits for Europe at scale. “The tide can lift all boats,” says Freise, who also highlighted opportunities to improve public-private partnerships and boost cooperation among nations to scale innovation and growth. “Europe knows it’s in a critical period,” he says. “And if history is any guide, that’s when Europe moves.”

—Edited by Eric Quiñones, senior editor, New Jersey

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