12
DIGITAL GLOBALIZATION: A NEW ERA OF GLOBAL FLOWS April 2016
DIGITAL GLOBALIZATION: A NEW ERA OF GLOBAL FLOWS
April 2016
McKinsey & Company | 1
Has globalization stalled?
Flows of goods, services and finance, 1980–2014
$ trillion, nominal; % of GDP
26
39
53
19
2000
31
2014
-14 p.p.
1990
5
1980
6
2007
3
14
12
SOURCE: UNCTAD; IMF Balance of Payments; World Bank; McKinsey Global Institute analysis
Service
Goods
All flows as % of GDP
Finance
McKinsey & Company | 2
All forms of goods trade have flattened since the
Great Recession
SOURCE: IHS; UNCTAD; McKinsey Global Institute analysis
Value of goods trade, 2002–14
% of world GDP
0
1
2
3
4
5
6
7
8
9
10
11
12
2002
-1.1
08 2014
0
1
2
3
4
5
6
7
8
9
10
11
12
-0.4
08 2014 2002
0
1
2
3
4
5
6
7
8
9
10
11
12
2014 08 2002
-0.5
Processed and raw
materials Intermediate goods Finished goods
Trade value
$ trillion
4.6 6.1 8.5
McKinsey & Company | 3
Growth in global consumption has exceeded increase in trade for many
goods categories, suggesting localization of production
Growth of global consumption vs. growth of trade
SOURCE: ITC; IHS; UNCTAD; World Bank; McKinsey Global Institute analysis
-3
-2
-1
0
1
2
3
4
5
-3 -2 -1 0 1 2 3 4 5
CAGR of trade (2011 – 2014)
CAGR of consumption (2011 – 2014)
Chemicals
Apparel
Metals
Others
Transport
Equipment
Machinery
Mineral fuels
Goods categories where trade growth trailed consumption
McKinsey & Company | 4 SOURCE: McKinsey Global Institute analysis
By 2025, 3D printing could displace some trade in
manufactured goods
The US Navy
Oil caps, drain
plugs and even
drones
The US Army
Mobile production
facilities to
manufacture
parts in the
combat zone
GE Aviation
Fuel nozzles for
the new Leap
engine that are
five times the
lifespan and
weigh about
75 per cent less
Maersk Tankers
Parts for its
tanker vessels
eliminating costs
of warehouse
and packing,
airfreight to the
port, customs
clearance and
chartering of the
delivery ship
Field Ready
Medical
disposables in
Haiti to reduce
procurement
costs and
transport time
Examples of 3D printing
McKinsey & Company | 5
Cross-border data flows are surging and connecting
more countries
SOURCE: TeleGeography; McKinsey Global Institute analysis
Used cross-border bandwidth
1 Estimated using public Internet bandwidth data.
20051
100% = 4.7 Terabits per second (Tbps)
Size of bubble represents intraregional used bandwidth
NA
United States and Canada
LA
Latin America
AA
Africa
EU
Europe
ME
Middle East
OC
Oceania
AS
Asia
Regions
Bandwidth
Gigabits per second (Gbps) <50 50–100 100–500 500–1,000 1,000–5,000 5,000–20,000 >20,000
NA
LA
ME
AF
EU
OC
AS
45x
2014
100% = 211.3 Tbps
NA
LA
ME
AA
EU
OC
AS
McKinsey & Company | 6
Share of selected cross-border flows that are digital, 2014
%
SOURCE: AliResearch; TeleGeography; UNCTAD; McKinsey Global Institute analysis
1 E-commerce share of total goods trade; includes B2C and B2B e-commerce.
2 Digitally enabled share of total services trade.
3 Ratio of Skype calls to total international calls.
Digital constitutes a significant share of other types of flows
54
46
Calls
12
88
Goods
50 50
Services
McKinsey & Company | 7 SOURCE: Facebook, Twitter, Freelancer, Upwork, Mashable, Fortune, Statista, McKinsey Global Institute analysis
Digital technologies are transforming global flows in three ways
300
300
Amazon
Skype
407
320
650
Alibaba
1,000
Youtube
1,590
1,000
eBay
LinkedIn 100
162
PayPal 179
400 Instagram
Active users on select platforms
In millions, 4Q 2015 or latest available
Digital goods
Digital wrappers
Online platforms
McKinsey & Company | 8
Nearly 1 billion online shoppers will spend $1 trillion in cross-
border commerce by 2020
SOURCE: AliResearch; McKinsey Global Institute analysis
3.4
2020E
0.3
18E
1.8
19E
3.1
2.2
2.5
15 16E
2.4
1.9
1.0
2.1
0.7
2.2 1.9
0.5 0.4
2.8
0.8
1.6
17E
1.6
1.4
0.2
2014
1.2
1.9
1.2 1.2
17E
0.9
19E
1.0
18E 16E
1.2
2.0
1.2
2.1
2020E
0.8
1.8
0.5
1.6
15
0.7 1.5 0.6
1.1
0.4
2014
1.3
0.3
Global B2C e-commerce shoppers
Billion
Global B2C e-commerce transaction volume
$ trillion
Cross-
border
% of
total
+27% p.a.
+21% p.a.
NOTE: Numbers may not sum due to rounding.
15 16 18 21 24 27 29 23 25 28 33 37 42 45
Cross-border Domestic Forecast
McKinsey & Company | 9
Instead of waiting for benefits of globalization to trickle down,
SMEs can go global on their own
SOURCE: Facebook; Amazon; WSJ; McKinsey Global Institute analysis
50 million
10 million
2 million
Number of SMEs on select platforms
McKinsey & Company | 10
Global flows have increased global GDP by 10 percent over the
last decade, worth at least $7.8 trillion
SOURCE: McKinsey Global Institute analysis
+$7.8T Increase in world
GDP from flows—a
10% lift
+$2.8T Increase in world
GDP from cross-
border digital flows
+$2.6T Increase in world
GDP from goods
trade
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