The McKinsey Quarterly Newsletter: January 2002 	
  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   [IMAGE]  Greetings from The McKinsey Quarterly!  How does a bull market differ from a bubble? The question is more than academic. If history's greatest bull market was really a speculative bubble, the United States faces prolonged economic stagnation-much like the aftermath of nearly every speculative explosion from Holland's tulip mania to Japan's "bubble economy."  Certainly, some of the recent US stock market euphoria wasn't justified. But the underpinnings of the US economy-unlike Japan's-are sound. Twenty-five years of deregulation, healthy competition, and renewed entrepreneurship have made the US economy stronger than ever.  A yearlong research project by the McKinsey 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 reason for optimism.  See you at the site!  Lang Davison Editor, mckinseyquarterly.com  [IMAGE]  This month at mckinseyquarterly.com   Retail: The Wal-Mart effect   Retail may be the last place you would expect a productivity miracle. Yet retail productivity growth explains nearly one-quarter of the economy-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-manufacturing industries account for a further one-quarter of the jump in the US productivity growth rate during the late 1990s. But the tide has since turned for the worse-and the industries' fortunes may not improve in the next three to five years.  Banking: The IT paradox   Surprisingly, dismal productivity 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 productivity 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 strategy 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 money cautiously. Yet society pays a price when foundations and nonprofit organizations stockpile their assets. The authors of this piece argue that generously endowed nonprofits should spend their wealth sooner rather than later.  [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 best will get bigger  Pharma: Can the middle hold?  Hospitals get serious about operations   [IMAGE]  The McKinsey Quarterly Reader   Read the Reader! Our current PDF bundle is "Strategy in an uncertain world ."  Note: Adobe Acrobat Reader version 3.0 or higher is required. The large file size (740K) may require a lengthy download time for users without a broadband connection to the Internet. [IMAGE]  Share the wealth!  If you know colleagues who would be interested in The McKinsey Quarterly, please forward this e-mail message to them . [IMAGE]  You are receiving this monthly newsletter because you are a registered member of mckinseyquarterly.com , the on-line business and economics journal published by McKinsey & Company, and have requested this information be sent to you.  Visit your member profile to change your subscription preferences.  There, you may unsubscribe from this newsletter, subscribe to other McKinsey Quarterly e-mail services, change your e-mail address, and make other revisions to your member account.  To unsubscribe from all McKinsey Quarterly mailing lists, click here  to e-mail us your request. YOU WILL RECEIVE NO FURTHER E-MAIL from The McKinsey Quarterly if you take this action.   PLEASE DO NOT REPLY TO THIS MESSAGE. Address questions or comments to: quarterly_info@mckinsey.com   	

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