How countries can lift national Productivity: bold moves, better competition, and inclusive growth

Rethinking what drives national productivity

When we talk about boosting a nation’s productivity, most people imagine millions of firms gradually becoming more efficient. But real-world data tells a different story. In fact, a small number of firms — national champions — are responsible for the majority of productivity gains.

These are the businesses that find new ways to grow, scale, and shift value. Rather than inching forward, they take bold strides that reshape entire sectors.

At the same time, achieving broad-based productivity growth demands more than just relying on standout companies. Governments also need to create the conditions for innovation to flourish, competition to thrive, and workers to gain the right skills. And perhaps most importantly, we need to focus on inclusive productivity — ensuring that gains reach the wider workforce and economy.

This article explores how countries can lift their productivity by supporting national champions, increasing competition, rethinking R&D strategies, addressing skill gaps, and keeping low-productivity workers connected to the labour market. It’s not just about doing things better — it’s about doing the right things differently.

The power of national champions: few firms, big impact

One of the biggest surprises in productivity research is just how concentrated progress really is. Studies show that a few large firms are usually responsible for around two-thirds of productivity growth across key sectors in advanced economies. These "national champions" punch far above their weight.

These firms aren’t necessarily the most efficient or the fastest growing. What sets them apart is their ability to combine scale, innovation, and market impact in a way that moves the needle for their entire country. Their success proves the “power of one” — the idea that a single firm’s strategic decisions can influence national economic performance.

Champions are found across industries. Some drive change by scaling cutting-edge technologies, others by redefining customer value or rebalancing portfolios towards more productive segments. What they have in common is a readiness to act boldly, often creating ripple effects across their sectors. For example, digital disruptors in retail or logistics don’t just grow themselves — they force others to adapt, raising the overall productivity bar.

Bold strategies, not just efficiency tweaks

It’s a common misconception that productivity gains come mainly from squeezing out cost inefficiencies. In truth, the most impactful firms usually grow by creating new value — not just cutting expenses. Case studies show key strategic moves that champions use:

1. Improving customer value propositions: Productivity grows when firms enhance their offering — such as better logistics, smarter personalisation, or omnichannel options.

2. Scaling transformative business models: Firms that rapidly scale high-value digital or service-based models lead sector growth.

3. Refocusing on productive offerings: Leaders often shift away from low-margin products or regions to double down on areas with better returns

4. Building network effects and scale advantages: Creating ecosystems or strengthening supply chains can unlock huge productivity jumps.

5. Reorganising for better efficiency at scale: While operational transformation matters, it usually plays a supporting role to strategic repositioning.

These moves usually occur in bursts, not steady trickles — often triggered by market disruption or competitive pressure. And their effects often go beyond the firms themselves, setting off a chain reaction across industries.

The role of sector dynamics: fertile ground for growth

Some sectors naturally lend themselves to the emergence of champions. Industries with space for innovation, customer value creation, or business model transformation — such as tech, logistics, or retail — tend to see more rapid productivity growth.

On the other hand, sectors that rely mainly on cost-cutting or operate under heavy constraints (such as regulation or weak demand) often struggle to produce high-performing firms. Here, the balance of champions to laggards — firms that pull down national productivity — plays a decisive role.

However, champions can come from anywhere. Some evolve from niche players. Others are legacy firms that reinvent themselves. The key is a willingness to transform and a supportive environment that allows them to thrive.

Creating the right conditions: five national priorities

While champion firms drive growth, policymakers still have a critical role to play. It’s not just about picking winners — it’s about building an ecosystem where more firms have the chance to rise.

Here are five areas that deserve attention:

1. Boosting competition to unlock innovation

More competition is one of the most powerful levers for national productivity. When firms compete, they’re pushed to innovate and become more productive. But rising market concentration in some sectors has dulled this edge.

Policymakers can take steps to revive competitive pressure, including stronger enforcement of competition rules, reforming intellectual property regimes to avoid stifling innovation, and removing unnecessary occupational licensing requirements that block new entrants.

A more open, contestable market gives more firms the opportunity to become tomorrow’s Standouts.

2. Investing in human capital — skills for the future

More years of schooling won’t automatically result in better productivity. What matters is the relevance and quality of education and training. Many young adults lack the basic skills to thrive in today’s workplace, limiting the potential for inclusive productivity gains.

National strategies must focus on improving foundational education, expanding access to vocational and technical training, and reskilling workers for high-demand sectors. The most productive economies will be those with adaptable, well-trained workforces.

3. Making smarter R&D investments

Innovation depends on research — but the way countries allocate R&D funding matters. Too often, public funding is overly concentrated in a few areas, while emerging fields are under-resourced.

A more balanced R&D portfolio — spread across different scientific domains — gives economies a better shot at discovering breakthrough technologies. Governments can also do more to connect research institutions with business, helping to accelerate commercial applications.

4. Focusing on inclusive productivity and job quality

Automation and technological shifts can improve output — but they also risk leaving some workers behind. Productivity growth should not come at the cost of excluding low-wage or lower-skilled workers from the labour market.

True national progress means ensuring that all workers benefit from growth. This includes keeping people employed, even in lower-productivity roles, and creating pathways for skills development. A job is not just an economic unit — it’s also a stepping stone to future contribution.

Policies should recognise the social value of work, not just its output per hour. A national productivity strategy should be accountable for labour market exits and aim to keep workers engaged and improving.

5. Encouraging reallocation without exclusion

Some firms and sectors naturally shrink as others rise. But to make this reallocation process productive, governments must ensure it doesn’t result in mass displacement.

This means supporting transitions — helping workers and capital flow to more productive areas through retraining, targeted incentives, and infrastructure investment. Encouraging business exits when necessary is part of the process, but it must be balanced with a focus on resilience and fairness.

The case for inclusive champions: productivity for all

It’s tempting to chase growth by focusing solely on standout firms and tech-powered sectors. But long-term prosperity also depends on bringing more firms and people along for the ride.

About half of all large firms already improve productivity faster than their sector average. And while most micro-, small-, and medium-sized enterprises are too small individually to move national figures, collectively they account for up to a third of productivity growth in key sectors.

Tomorrow’s champions may be hiding in today’s overlooked companies. The job of policymakers is to ensure the conditions exist for these firms to scale, transform, and contribute.

Summary: a new productivity playbook

Boosting national productivity isn’t about pushing every firm to be a bit more efficient. It’s about enabling the bold — while creating a system that’s fair, open, and inclusive.

That means:

• Backing national champions that take bold moves

• Revitalising competition to spur innovation

• Aligning R&D spending with future opportunities

• Raising skill levels and job quality

• Ensuring that productivity growth includes all workers, not just the most productive

Productivity remains the ultimate driver of prosperity. But how countries achieve it — and who benefits — is a choice. With the right mix of strategic focus and inclusive policy, nations can turn today’s uneven progress into widespread opportunity.

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