PRODUCTIVITY IS THE KEY TO A HEALTHY ECONOMY

Did accelerated IT investments create the US labor productivity boom of the late 1990s? Or can it be attributed to some other factors?

New research from the McKinsey Global Institute shows that IT was only one of several factors responsible for the productivity surge in the 90s.

In a handful of competitive industries, the most important cause was managerial innovation, that was sometimes (but not always) aided by technology. Many of the innovations underlying the acceleration will continue to generate productivity growth above the long-term trend for the next several years.

In general, three factors: (1) managerial innovation, (2) increased competition (sometimes sparked by regulatory change), and (3) cyclical demand factors were the primary drivers of the boom in US labor productivity in the 90s.

IT always played a supporting role during this period. IT was not one of the primary factors.