Today’s post is a tad off-topic, but likewise upbeat in its sense of five “game-changers” identified by McKinsey Global Institute that will spur productivity (and Productivity is, after all, our first name…), as well as likely boost U.S. GDP and generate further increases in employment.
In a paper written last year entitled “Game Changers: Five Opportunities for U.S. Growth and Renewal,” the five McKinsey staffer/authors point to five factors they believe will “accelerate short- and medium-term growth and lay the groundwork for sustainably building the nation’s wealth over the long term.” Those factors include:
Game-changer #1: Large-scale shale gas and oil production – We’ve all heard about fracking by now. McKinsey estimates that the opportunity for shale energy, if fully utilized, could add a whopping 2 to 4 percent to our annual GDP and create well over 1 million permanent jobs by 2020.
Game-changer #2: Increased trade competitiveness in knowledge-intensive manufactured goods. Citing areas including petrochemical production, aerospace and the automotive industries, McKinsey sees a lessening of trade deficits through knowledge-intensive industries like building world-class infrastructure for talent, a sustained commitment to R&D and innovation, an improving U.S. business environment via tax and regulatory reform, aggressive pursuit of new export markets as the consuming class grows, and attracting more production from at home and abroad to the U.S.
Game-changer #3: Harnessing “big data” to raise productivity. With an aging population and fall in labor force participation the U.S. needs to increase productivity by over 30% — a big stretch not seen since the 1960s. Recent breakthroughs in big data and advanced analytics could provide new efficiencies from the data collected in retail, medical, legal and social technologies, not to mention sensors, cameras, etc. McKinsey sees major impact coming in four key sectors including retail, manufacturing, health care and government services. In the meantime, we have a shortage of the needed “data scientists,” thus creating further employment growth possibilities.
Game-changer #4: Building an infrastructure foundation for long-term growth. We’ve underinvested in infrastructure now for years, and it’s created a backlog of necessary maintenance in critical areas like roads, highways and water systems, to name a few. If (and these days the Ifs loom large) the U.S. spends what’s needed (about 1% of GDP) on the necessary infrastructure, we will set the stage for future growth and investments of $150 billion and up for the next 15 to 20 years. Here again McKinsey sees the U.S. adding 1.5% to GDP and creating nearly 2 million jobs.
Game-changer #5: Investing in America’s human capital. Our global edge in education is eroding. U.S. student achievement measures have fallen significantly. And students may not be acquiring the skills they need to succeed in the workforce. McKinsey recommends expanding apprenticeships and non-degree training programs; a concerted focus on improving learning and job prospects for graduates of colleges and junior colleges; more focus on STEM courses; and a rethinking of immigration policies. Collectively, McKinsey estimates we could raise GDP by $265 billion by 2020.
What might we conclude would be reasonable forecasts for the future given all we’ve said today? We’ll take a look at just that in the concluding half of our post, in an assessment offered by the folks at “Trends E-Magazine.” Stay tuned…