|HOW ASIA CAN BOOST PRODUCTIVITY AND ECONOMIC GROWTH|
Aruba, March 20, 2015 - Growth in China and other parts of Asia will depend on skills training, more process mechanization, and better resource use, says McKinsey director Jonathan Woetzel.
One of the biggest challenges to sustaining growth in Asia is accelerating productivity—yet it also presents opportunities. In this interview, McKinsey director Jonathan Woetzel highlights the need to help people acquire skills and for Asia’s workforce to become more inclusive of women and older adults if the region’s economic growth is to exceed historical rates. An edited transcript of Woetzel’s remarks follows.
Age has been the world’s growth driver, the growth champion. For the past 50 years, most countries in Asia have grown faster than their North American and Western European counterparts. China is only the most noteworthy, growing more than 7 percent a year, but it’s by no means alone. Korea, Indonesia, and India are all growing more than 5 percent per year. Even Japan, at 3.3 percent over the past 50 years, has been growing faster than the US and Western Europe.
As we go forward, many of the demographics, the change that was motivating some of that growth, that’s going to slow down. We see Asia, similar to the rest of the world, as having just simply much less of that fertility-driven, longer-life-span-impacted population growth.
That means that kind of growth is going to slow. We’re just not going to see that level of demand. As a result, if it’s all up to historical productivity, growth is going to be slower. Growth is going to slow down not just in the older countries, like Japan, but also across the board, in China, India, and Indonesia.
Specifically, we would say China has, for example, been growing at 7.5 percent over the past 50 years. Going forward, that might only be 5 percent. That might not seem like much. But it’s still 25 to 30 percent slower than it’s been growing in the past.