The Power of Companies to Boost Productivity

Despite progress in several areas, productivity growth in Latin America has stagnated for the past 25 years, averaging only 0.8% annually, the lowest rate worldwide. Mexico’s figure is even lower. This slow pace continues to constrain economic advancement and limit the region’s potential for inclusive growth.

The McKinsey Global Institute (MGI) report, "The power of one: How standout firms grow national productivity," emphasizes that businesses themselves can be powerful engines of productivity. By taking strategic and ambitious actions to enhance their own performance, they can set new industry standards and generate momentum that drives entire economies forward.

While some large corporations already recognize this potential, many others — of all sizes — have yet to realize the extent of their influence. Unlocking this potential across a broader set of firms could significantly boost both productivity and growth. In short, Mexico needs more companies to lead boldly with strategic, productivity-driven actions.

In the region, the dispersion of large and medium-sized companies is significant, with more than 99% of firms classified as MSMEs. These companies form the backbone of the economy, accounting for around 60% of formal employment. Strengthening their productivity is therefore crucial not only for competitiveness, but also for social and economic inclusion.

Why Productivity Matters

Improving productivity is not just an economic goal, it is essential to raising living standards and sustaining competitiveness. Greater efficiency enables economies to produce more with the same resources, leading to higher incomes, better wages, and stronger investment capacity in innovation and development. Consumers benefit directly as well, through better products, lower prices, and greater variety, which together enhance overall welfare.

The pressure to address this issue has never been greater. For years, the region benefited from a demographic bonus, but that advantage is nearing its end. With a fertility rate of 1.8 children per woman, already below the replacement level, Latin America’s working-age population will soon peak. The window of opportunity to capitalize on this demographic strength is closing fast.

Lessons From Global Leaders

MGI’s analysis reveals that productivity does not advance gradually, it grows in bursts. These leaps occur when companies take bold steps that transform how value is created and scaled. Across markets, a relatively small number of leading firms have been responsible for reshaping productivity trajectories and setting new benchmarks for growth.

The potential impact is striking: In some countries, a dozen top-performing firms could have doubled national productivity growth. In the United States, for example, just 5% of companies accounted for 23% of employment and generated 78% of total productivity growth. These figures highlight how concentrated the drivers of progress can be — and how catalytic standout firms often are.

Turning Ambition Into Impact

Given this dynamic, countries and companies alike should focus on understanding what sets these outperformers apart. Their experiences can inspire others to adapt successful practices, tailor them to local realities, and develop new ideas that spark similar chain reactions.

This path involves identifying and scaling effective business models, investing in technology to boost efficiency, and fostering a culture of innovation and creativity. Equally vital is creating an environment that attracts global leaders — firms whose talent, capital, and experience can strengthen national and regional ecosystems.

When business ambition is translated into concrete strategic decisions and supported by collaboration with the right partners, the impact can be systemic: higher productivity, job creation, investment inflows, and a stronger, more formal labor market.

Ultimately, empowering businesses to act on this potential can help build a more competitive, innovative, and resilient economy, one capable of achieving sustained and scalable growth in the years ahead.