Demographics and productivity risks

Chris Bradley, Senior Partner at McKinsey & Company and Director of the McKinsey Global Institute, discusses the ideas behind his book A Century of Plenty and the long-term drivers of economic growth.

Bradley explains that much of the public debate about the economy assumes growth is limited or zero-sum. His research argues the opposite. Over long periods, societies have repeatedly expanded prosperity through investment, technology, and knowledge.

A central theme in the conversation is the importance of investment. Bradley notes that productivity growth depends heavily on sustained investment in capital, infrastructure, and innovation. When investment slows, productivity usually slows as well.

He also discusses the institutions that support economic progress. Stable rules, strong legal systems, and functioning markets create the conditions that allow investment and innovation to take place. When these conditions exist, growth tends to follow.

The conversation also addresses the common belief that the world is running out of resources. Bradley explains that history shows a different pattern. Improvements in exploration, technology, and substitution have often increased available resources even as demand rises.

Demographic change presents another challenge. Many countries are now experiencing falling birth rates and aging populations. With fewer workers supporting more retirees, future growth will depend increasingly on productivity improvements.

Artificial intelligence may play a role here. Bradley describes AI as a general-purpose technology that could automate certain tasks while increasing productivity in many fields. As with earlier technological advances, the likely result is a change in the type of work people do rather than the disappearance of work altogether.

Key insights from the conversation:

1. Economic progress depends on investment. Productivity growth historically follows sustained investment in capital, infrastructure, and new technologies.

2. Growth is not inherently zero-sum. Economic expansion often occurs because innovation and knowledge enlarge the productive capacity of societies.

3. Resource scarcity has repeatedly been mitigated by discovery. Advances in exploration, extraction, and substitution have historically expanded the available supply of critical materials.

4. Demographic change is a major structural risk. Aging populations and declining fertility rates will increasingly challenge economic growth and fiscal systems.

5. AI is likely to augment productivity rather than eliminate work. As in previous technological shifts, automation changes the mix of tasks while enabling new forms of economic activity.

6. The discussion provides a structured view of how growth, technology, and demographics interact—and why the long-term outlook for human prosperity remains closely tied to investment, innovation, and institutional choices.

Chris Bradley is a senior partner at McKinsey & Company based in Sydney and serves as a director of the McKinsey Global Institute (MGI), where he leads research on the economic and business issues most critical to the world's companies and policy leaders. He is an author of a new book, A Century of Plenty: A Story of Progress for Generations to Come

Get Chris's book, A Century of Plenty, here: https://tinyurl.com/mryykcxc

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