The Leading Independent
Resource for Top-tier MBA
Home » Blog » News » HBS U.S. Competitiveness Project Report: Political Divide Holding Economy Back

HBS U.S. Competitiveness Project Report: Political Divide Holding Economy Back

Image for HBS U.S. Competitiveness Project Report: Political Divide Holding Economy Back

With the divisive national election launching an onslaught of emotionally-charged headlines against the backdrop of a continually bearish national economy, it may not be surprising to hear that some of Harvard Business School’s top minds are worried.

As part of the 2016 U.S. Competitiveness Project report, “Problems Unsolved and a Nation Divided,” HBS Professors Michael E. Porter, Jan W. Rivkin and Mihir A. Desai, together with Program Director and Senior Researcher Manjari Raman, reveal their findings that the very vocal and public dysfunction of the political system is the key factor holding the U.S. economy back. The report contains five years of in-depth analysis of the country’s economic competitiveness with other global developing economies based on surveys of HBS alumni and the general public. It also offers what the researchers believe is the most prudent approach to solving the issue.

“Now, more than any time in recent history, the U.S. needs a national economic strategy involving action by business, state and local governments, and the federal government,” Porter, co-chair of the U.S. Competitiveness Project, writes. “To make the U.S. more competitive, it is imperative that we have a fact-based national discussion about our economy and future prosperity. Unfortunately, the rhetoric this election year has added to the almost complete disconnect between the national discourse and the reality of what is causing our problems and what to do about them. This must change.”

The researchers’ findings also reveal that the sluggish growth leaves many U.S. citizens behind in terms of overall economic development. “Economic anxiety is fueling angry, divisive political campaigns with proposals that could make the economy worse,” writes Rivkin, the project’s other co-chair. “The American political system is now threatening the American economy, and vice versa. We need a sober look at the strengths and weaknesses of the U.S. economy, so that leaders in government, business and other parts of society can work together on a national economic strategy for shared prosperity.”

Many of the study’s findings are hardly new to those who have paid attention to the economy since the beginning of the Great Recession. The researchers conclude that the nation’s top earners (both individuals and businesses) are indeed thriving, but middle and lower sectors of the economy are not. They also note that for the first time in five years, the overall outlook on economic growth has actually grown more pessimistic, which in turn affects confidence in markets themselves.

Half of those surveyed expect the U.S. economy to become less globally competitive over the next three years. About 41 percent of firms expected to pay less well during that same three-year time frame, in contrast to only 25 percent of firms that expect to increase pay. As well, 47 percent of firms expect hiring contractions in the next three years, as compared to just 16 percent of firms expecting to increase hiring over the same time period.

Read the complete U.S. Competitiveness Project report here, including what the researchers believe truly caused the Great Recession and what is needed from Washington’s leaders.

*Above image courtesy of Harvard Business School

Matthew Korman
Matthew Korman is a contributing author and editor for Clear Admit. Since graduating from Rowan University with a degree in journalism and political science, Matthew has worked with numerous academic institutions, in addition to roles as a music industry writer, promoter, and data analyst. His works have appeared in publications such as NPR and Sports Illustrated.