Globalization in Transition: The Future of Trade and Value Chains
How is globalization reshaping global value chains?
McKinsey Global Institute report analyzes the dynamics of global value chains. Global value chains are being reshaped by rising demand and new industry capabilities in the developing world as well as a wave of new technologies. Flow of services and data are playing a bigger role in the global economy and global value chains are becoming more knowledge intensive.
- Global value chains are undergoing structural shifts including the growth of services, declining labor-cost arbitrage, value chains becoming regional and less global, and the growth of knowledge intensive value chains.
- The geography of global demand is changing as emerging markets will consume two thirds of the world’s manufactured goods by 2025.
- The rise of domestic supply chains in China and emerging markets has decreased global trade intensity.
- Digital globalization is changing costs and will fuel services trade.
- Companies need to reevaluate strategies to operate globally by reassessing competition along the value chain, capturing value from services and reconsidering operational footprints to reflect new risks.
Source: McKinsey Institute. Full article can be found here.