Magazine article The Wilson Quarterly

"Service Sector Productivity."

Magazine article The Wilson Quarterly

"Service Sector Productivity."

Article excerpt

That the United States has not fallen behind the other advanced nations in productivity should not be news. In 1990, gross domestic product (GDP) per capita in the United States was $21,450--16 percent greater than in West Germany, 22 percent greater than in Japan, and 23 percent greater than in France. Where the United States has been lagging, at least until lately, is in its rate of productivity growth. What is surprising, note the authors of this report from McKinsey and Co., an international management consulting firm, is that nearly a half-century after the end of World War II, a greater convergence in GDP per capita has not occurred. Technology and capital now can move freely among the advanced nations, and workers are equally healthy and well-educated, yet national differences in productivity persist.

Part of the reason is that in the United States, the two-worker family has become common, and so a larger proportion of the populace is employed. If productivity is measured by GDP per employed person, France and Germany improve their relative standing. Even so, substantial differences in productivity remain.

To get a better picture of what is going on, the authors focus on the market economy (leaving out government, health, and education). This shows the United States still the leader in GDP per employed person, with Japan, surprisingly, pulling up the rear (with productivity in 1989 only 61 percent that of the United States). The explanation? While Japanese manufacturing firms dominate certain world markets, they account for only a fraction of Japan's economy; many other Japanese firms are not very efficient or productive. …

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