If the United States were able to close the gap between its educational achievement levels and those of better-performing nations such as Finland and Korea, U.S. GDP could be as much as $1.3 trillion to $2.3 trillion higher.
A series of McKinsey Global Institute reports find that a lack of innovation and productivity growth in four critical sectors--education, health care, government, and national infrastructure--are holding back broader economic growth. McKinsey's 2009 report, The Economic Impact of the Achievement Gap in America's Schools, finds that the educational achievement gap between the United States and its competitors amounts to, "the economic equivalent of a permanent national recession," and that if the United States boosted its educational achievement levels to equal those of world leaders such as Finland or South Korea, the annual boost to the U.S. economy would be greater than $1 trillion. And slow productivity growth in healthcare means that (relative to its size) the U.S. healthcare sector costs $400-$500 billion more than it would in other OECD economies. Further, McKinsey finds that if productivity growth in federal and state governments had matched the U.S. private sectors' over the past decade, we would have no deficit. For policymakers looking to boost U.S. growth, the message is clear: a productivity revolution in the public sector, particularly with regard to education, governance, and healthcare, would go a long way to restoring U.S. growth.