Friday, June 30, 2017

Book Review: 'The Productivity Imperative: Wealth And Poverty in the Global Economy' by Diana Farrell

The Productivity Imperative: Wealth And Poverty in the Global Economy
By Diana Farrell

Review by Robert Morris

I frequently read books in combination. For example, this one and Driving Growth: Breaking Down Barriers to Global Prosperity, edited by Diana Farrell who wrote an introduction to each and is also among the contributors to both. The material was generated by those associated with the McKinsey Global Institute (MGI) - of which Farrell serves as Director -- and its "Critical Trends in Economics and Management" initiatives.

As Farrell explains, the material in this volume consists of 11 articles "that demonstrate how increasing productivity at the sector level results in higher economic growth. They also illustrate how poor regulations, often well-intentioned, can hold back growth by impeding fair competition between enterprises." The articles are grouped in two sections: "How competition promotes growth" (Chapters 1 and 2) and "The productivity imperative at work" (Chapters 3-11).

I especially appreciate the provision of an "Ideas in Brief" section with each article that identifies a few of its key points. For example, preceding William W. Lewis' "The power of productivity"(Chapter 1): "Differences in the productivity of countries are attributed not to differences in labor or capital markets, but to the nature of competition in product markets." Preceding Didem Dincer Baser, Diana Farrell, and David E. Meen's article, "Turkey's quest for stable growth" (Chapter 6), "Turkey's productivity, now at 40 percent of the US level, could reach 70 percent if economic sectors increase productivity to their full potential." And preceding Heinz-Peter Elstrodt, Jorge A. Fergie, and Martha Laboissiere's article, "How Brazil can grow" (Chapter 11): "The five main barriers to Brazil's growth are a very large informal economy, macroeconomic factors that hinder investment, inappropriate regulations, poor public services, and weak infrastructure."

Obviously, it remains for each reader to determine the relevance and value of each article in relation to her or his own needs and interests. To me, one of the greatest values of the collection of articles is that all manner of key issues are addressed with rigor as their authors identify what the key barriers to global prosperity and then suggest how to overcome them.

Those who share my high regard for this volume are urged to read C. K. Prahalad's The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, Kenichi Ohmae's The Next Global Stage, Stuart L. Hart's Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the World's Most Difficult Problems, and The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the Next 50 Years, co-authored by Vijay Mahajan and Kamini Banga.

Editor's note: This review has been published with the permission of Robert Morris. Like what you read? Subscribe to the SFRB's free daily email notice so you can be up-to-date on our latest articles. Scroll up this page to the sign-up field on your right. 

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