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 The McKinsey Quarterly Newsletter: January 2002 =09
  If you would prefer to view this newsletter as a Web page, point your Web=
 browser to: http://www.mckinseyquarterly.com/newsletters/2002_01.htm   [IM=
AGE]  Greetings from The McKinsey Quarterly!  How does a bull market differ=
 from a bubble? The question is more than academic. If history's greatest b=
ull market was really a speculative bubble, the United States faces prolong=
ed economic stagnation-much like the aftermath of nearly every speculative =
explosion from Holland's tulip mania to Japan's "bubble economy."  Certainl=
y, some of the recent US stock market euphoria wasn't justified. But the un=
derpinnings of the US economy-unlike Japan's-are sound. Twenty-five years o=
f deregulation, healthy competition, and renewed entrepreneurship have made=
 the US economy stronger than ever.  A yearlong research project by the McK=
insey Global Institute (MGI) found that US productivity growth rates nearly=
 doubled during the late 1990s, from 1.4 percent (1972-95) to 2.5 percent (=
1995-2000). The primary source of these gains, reports MGI, wasn't, as some=
 economists have claimed, increased demand resulting from the stock market =
boom. Nor was it information technology.  "What's right with the US economy=
 ," based on MGI's report, argues that the secret behind the new economy is=
 old-fashioned competition and managerial innovation. That offers ample rea=
son for optimism.  See you at the site!  Lang Davison Editor, mckinseyquart=
erly.com  [IMAGE]  This month at mckinseyquarterly.com   Retail: The Wal-Ma=
rt effect   Retail may be the last place you would expect a productivity mi=
racle. Yet retail productivity growth explains nearly one-quarter of the ec=
onomy-wide acceleration in productivity that occurred in the United States =
during the late 1990s. The reason can be stated in two syllables: Wal-Mart.=
  Computers: Why the party's over   The computer- and semiconductor-manufac=
turing industries account for a further one-quarter of the jump in the US p=
roductivity growth rate during the late 1990s. But the tide has since turne=
d for the worse-and the industries' fortunes may not improve in the next th=
ree to five years.  Banking: The IT paradox   Surprisingly, dismal producti=
vity growth trends in the banking industry stand in contrast to the success=
 stories in other parts of the US economy. It wasn't for lack of trying-the=
 industry's IT investments accelerated substantially. Why did its labor pro=
ductivity growth rates actually fall?  A tune-up for China's auto industry =
  Most global automakers have had big investments in China only since 1999,=
 so it may seem odd to advocate scaling them back now. Yet an asset-light s=
trategy in China would allow carmakers to concentrate on what they do best-=
developing products and brands-while contracting out the full production of=
 autos, and not just components, to Chinese manufacturers.  For nonprofits,=
 time is money   It isn't hard to fathom why nonprofits distribute their mo=
ney cautiously. Yet society pays a price when foundations and nonprofit org=
anizations stockpile their assets. The authors of this piece argue that gen=
erously endowed nonprofits should spend their wealth sooner rather than lat=
er.  [IMAGE]  Top 5 most popular articles in Health Care   A new model for =
disease management  Unlocking the value in Big Pharma  Health on-line-the b=
est will get bigger  Pharma: Can the middle hold?  Hospitals get serious ab=
out operations   [IMAGE]  The McKinsey Quarterly Reader   Read the Reader! =
Our current PDF bundle is "Strategy in an uncertain world ."  Note: Adobe A=
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