McKinsey: Investment and Industrial Policy: A Perspective on the Future 

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McKinsey: Investment and Industrial Policy: A Perspective on the Future

Key Learnings from the Presentation

The McKinsey presentation titled “Investment and Industrial Policy: A Perspective on the Future,” presented at the UNCTAD Trade and Development Board’s sixty-fifth session on October 1, 2018, offers a detailed analysis of the evolving dynamics of global flows and their implications for economic growth and policy. This summary captures the essential insights and actionable recommendations outlined in the document.

Key Insights

• Shift from Traditional to Digital Globalization: Over the past two decades, traditional flows of goods, services, and finance have declined relative to GDP, signaling a shift towards digital globalization. This new era is characterized by explosive growth in cross-border data flows, expected to increase by 3.5 times by 2021.
• Digital Globalization’s Impact: Digital technologies are revolutionizing business models, facilitating more cross-border activity, and enabling remote operations, supply chain management, and global market access. This transformation has broadened participation across borders and is changing how businesses operate internationally.
• Economic Contributions of Global Flows: Global flows, particularly data flows, significantly contribute to GDP. Cross-border data flows now have a more substantial impact on global GDP than traditional goods trade, accounting for a considerable portion of economic output.
• Advanced Economies vs. Developing Countries: The McKinsey Global Institute Connectedness Index reveals a disparity in global connectedness, with advanced economies generally more integrated into global flows than developing ones. However, countries on the periphery stand to gain more from embracing digital globalization.
• Policy Challenges and Recommendations: The transition to a digital economy poses new policy challenges. Recommendations for policymakers include strategically positioning their countries in global value chains, addressing barriers to global flows, investing in human capital, building necessary infrastructure, and prioritizing cybersecurity and privacy.

Actionable Insights

• Strategic Positioning in Global Value Chains: Countries should identify and leverage their strengths to play a more integral role in global value chains, potentially leapfrogging in development stages through digital advancements.
• Enhancing Digital Infrastructure: Investment in digital infrastructure and closing the digital divide are crucial for countries to fully harness the benefits of digital globalization.
• Navigating Policy Barriers: Addressing policy and administrative barriers that hinder global flows, while ensuring an open Internet and protecting user privacy, is essential for fostering a conducive environment for digital economy growth.
• Addressing Economic Dislocations: Policies should be crafted to mitigate the adverse effects of digital globalization, ensuring that the benefits are broadly shared within societies.
• Cybersecurity Focus: With the increasing importance of data flows, making cybersecurity a top priority is critical for protecting national and economic interests in the digital era.

About McKinsey

McKinsey & Company stands as a premier entity in the global management consulting sphere, initiated by James O. McKinsey in 1926. Anchored in New York City, this firm has carved a distinguished position in the consulting arena, offering strategic guidance across the globe to a diverse clientele that includes businesses, governments, and various institutions.

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