Futures

Exploring Future Economic Arenas: Growth, Dynamics, and Opportunities Through 2040, (from page 20241222.)

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Summary

This report from the McKinsey Global Institute identifies 18 potential future arenas that are expected to reshape the global economy by 2040, generating revenues between $29 trillion to $48 trillion. These arenas, characterized by high growth and dynamism, include sectors like AI, cybersecurity, and biotechnology. Analyzed data from 2005 to 2020 highlights 12 current arenas, such as e-commerce and biopharma, which have significantly increased their share of economic profit. The report defines the “arena-creation potion,” consisting of technological advancements, escalatory investments, and large markets, as key components driving competition in these sectors. Understanding these arenas is crucial for entrepreneurs, investors, and policymakers to navigate future economic landscapes.

Signals

name description change 10-year driving-force relevancy
Emergence of Future Arenas Identification of 18 future arenas that could reshape the global economy by 2040. Shift from current industries to new high-growth arenas like AI and biotechnology. Significant economic growth and transformation in sectors like AI, robotics, and biotechnology. Technological advancements and societal needs driving investment in emerging industries. 5
High Profit Margins in Arenas Arenas are projected to generate up to $6 trillion in profit by 2040. Change from lower profit margins in traditional industries to high profits in emerging arenas. A marked increase in the profitability of new industries, attracting more investments. The potential for high returns on investment motivates companies to enter these arenas. 4
Shifts in Global GDP Contribution Arenas expected to increase their share of global GDP from 4% to 10-16% by 2040. Transition from a minor to a significant contributor to global GDP by emerging industries. Arenas could dominate economic growth, influencing global economic policies and priorities. Growing demand for innovative solutions in various sectors drives this shift. 5
Escalatory Competition in Arenas Intense competition driven by technological changes and large markets. Transition from stable competition to dynamic, escalatory competition among companies. Increased innovation and rapid iteration in product development due to heightened competition. Companies’ need to maintain market share and improve product quality drives competition. 4
Creation of Global Giants Emergence of global corporations in high-growth arenas. Shift from small to medium enterprises to large global players in emerging sectors. A few corporations may dominate multiple arenas, shaping market dynamics and policies. The ability to scale rapidly in high-demand sectors encourages the creation of giants. 5
Investment Opportunities in Arenas Growing relevance for investors to allocate capital to emerging arenas. Transition from traditional investment areas to high-potential emerging industries. Investors may increasingly focus on sectors like biotech, AI, and future mobility. The pursuit of high returns drives investors to seek out innovative and profitable industries. 4

Concerns

name description relevancy
Economic Inequality Rapid growth of specific arenas may exacerbate wealth gaps as profits concentrate among few companies and individuals. 4
Market Volatility The dynamic nature of arenas could lead to increased competition and volatility, challenging stability in related industries. 4
Dependency on High Tech Reliance on emerging tech sectors might create vulnerabilities if they fail to deliver expected growth or stability. 5
Employment Displacement As arenas evolve, traditional jobs may be lost, leading to potential unemployment in declining sectors. 5
Regulatory Challenges Emerging industries may face backlash or lagging regulations, leading to potential legal and operational challenges. 3
Environmental Impact Accelerated growth in sectors like electric vehicles and biotech could have unforeseen environmental consequences. 4
Global Supply Chain Disruption The competition for resources and market share may lead to disruptions in global supply chains, impacting economies. 4
Innovation Overload Rapid technological advancements may outpace society’s ability to adapt, causing a disconnect in market outcomes. 3

Behaviors

name description relevancy
Growth in High-Dynamism Industries Industries defined by high growth and dynamism are expected to capture a larger share of global GDP by 2040. 5
Emergence of Future Arenas Identification of 18 potential future arenas that could reshape the global economy and generate significant revenues. 5
Escalatory Competition Increased competition characterized by large investments to gain market share and product quality edge among players in emerging arenas. 4
Shift Towards Tech and Biopharma Growing focus on technology-driven industries like AI software, cybersecurity, and biopharmaceuticals as key growth areas. 5
Investment in R&D and Value Creation Major shifts in investment and research towards outperforming industries that create more value. 4
Dynamic Market Share Changes Markets within arenas are marked by significant shifts in market share, allowing new entrants to thrive. 4
Job Opportunities in Winning Industries Emerging arenas present new job opportunities for individuals seeking careers in high-growth industries. 4
Capital Allocation Trends Investors are increasingly looking to allocate capital towards emerging arenas of competition. 4
Policy Maker Awareness Increased interest from policymakers in understanding the impact of emerging industries on national economies. 3

Technologies

description relevancy src
Technologies that leverage artificial intelligence to enhance software capabilities and deliver advanced services. 5 e502ba74ab806444d00506a037bc433e
Technologies focused on protecting systems, networks, and data from cyber threats and attacks. 5 e502ba74ab806444d00506a037bc433e
Innovative transportation solutions that utilize advanced aerial vehicles for urban and regional travel. 4 e502ba74ab806444d00506a037bc433e
Pharmaceutical developments targeting obesity and its associated health issues. 4 e502ba74ab806444d00506a037bc433e
Technologies involving the design, construction, operation, and use of robots for various applications. 5 e502ba74ab806444d00506a037bc433e
Biotechnological advancements that do not focus on healthcare but rather on agriculture, environmental sustainability, and other areas. 4 e502ba74ab806444d00506a037bc433e
Online platforms for buying and selling goods and services, continuing to evolve and expand. 5 e502ba74ab806444d00506a037bc433e
Biopharmaceutical innovations focusing on drugs derived from biological sources. 5 e502ba74ab806444d00506a037bc433e
Vehicles powered by electricity, contributing to sustainable transportation solutions. 5 e502ba74ab806444d00506a037bc433e
Services that provide on-demand computing resources and data storage through the internet. 5 e502ba74ab806444d00506a037bc433e

Issues

name description relevancy
High-Growth Arenas Industries characterized by high growth and dynamism, capturing significant economic expansion and shifting market shares. 5
Future Economic Reshaping The identification of 18 potential arenas that could reshape the global economy, generating substantial revenues by 2040. 5
Investment in Technology and Business Models Emerging business models and technological advancements that could lead to escalatory competition and market changes. 4
Profitability of Emerging Arenas Potential for new arenas to generate significant profits, impacting investment strategies and economic focus. 4
Workforce Impact of Emerging Industries The emergence of new industries may create job opportunities and require workforce adaptation in the coming decades. 4
Policy Implications of New Arenas The need for policymakers to understand and respond to the impact of emerging industries on national economies. 4
R&D Shifts in Arenas A shift in research and development focus towards high-growth arenas, influencing innovation patterns. 4
Market Capitalization Trends The significant difference in market capitalization growth between arenas and non-arenas indicating investment trends. 4
Global Corporations Rise The increasing emergence of global giants from high-growth arenas, reshaping competitive landscapes. 3
Future Job Market Dynamics The potential changes in job market dynamics due to the rise of new industries and technologies. 3