31 of 33 people found the following review helpful:
INNOVATION IN ECONOMIC THINKING, HIGHLY ACCESSIBLE TEXT, October 27, 2004
In this book, William Lewis sums up the conclusions drawn from ten years and a sequence of studies that try to determine what makes a country have better economic performance than another. In this innovative text, he argues that it is not the traditional macroeconomic variables, or even the traditional labor (education, hours worked, work ethic) and capital inputs, but rather the productivity of each of the major industries in those countries. Ok, so far, not an earthshattering finding. However, most interesting is his conclusion as to what leads to high productivity; not education, not access to finance, but good old free competition.
He shows how, in markets sheltered from competition by barriers or regulation, productivity remains low and so do the returns on capital and labor. The studies are drawn from developed (Japan, US, Europe) and developing nations (Brazil, India, Korea) and go in depth into particular industries in order to understand the factors that drive productivity. No book in recent publication is as insightful on the true engine that drives development.
The author was the leading partner at McKinsey in charge of the McKinsey Global Institute, McKinsey's thinktank. Using McKinsey resources, which are unique and unavailable to any other economist, Lewis was able to analyze conditions that could only previously be seen from afar by economists. His training as a physicist also helped him synthesize phenomena, drawing the overarching themes behind producitivity.
I highly recommend this book, it will breathe new life into economists that may be losing hope that development is not possible in certain places due to such factors as environment or culture. It is accessive to non-economists as well, so I hope policy-makers would have a chance to read it and follow some of its good advice.