The Next Era of Globalization Will Be Shaped by Customers, Technology, and Value Chains

New research from McKinsey looks in detail at 23 different industry value chains across 43 countries to get a better view of what companies are already doing on the ground and how they add up to fundamental changes that will shape the next era. It finds that the geography of global demand has radically changed over the past decade. China, India, and other emerging economies originally plugged into global value chains by making labor-intensive manufactured goods and exporting them to advanced economies. But now their billion new consumers are a powerful force. It’s an outdated assumption to think of them as “low-cost factories to the world.” They are lucrative consumer markets in their own right, and their companies are a new source of competition. Moreover, the developing world’s share of global consumption has risen by roughly 50% over the past decade. China now imports as many final goods as Germany—and more than Japan, the United Kingdom, or France. Companies are absorbing and reacting to these deeper shifts even as they try to cope with policy uncertainty. With both industry structures and the global economy in flux, this is a moment to re-evaluate where to compete along the value chain and where to operate around the globe in the future.