McKinsey Global Institute produced a massive white paper (The Next Big Arenas of Competition October 2024) on the industries that are likely to enjoy outsized future growth and transform the global landscape. These “arenas” are expected to be centers of competition, innovation, and value creation. To set the stage, the firm identified twelve arenas that emerged between 2005 and 2020 noting that they garnered 49% of all economic profits in 2019 as compared to 9% in 2005. Among the twelve are software, the consumer internet, consumer electronics, biopharmaceuticals, and information-enabled business services. One key metric is that these 12 arenas accounted for 65% of all business R&D spending in 2020.
The paper then went on to explore what McKinsey believes will be the 18 arenas of tomorrow. While each deserves an in-depth discussion, I simply list them with the hope that those who are interested in more detail will take on the entire paper. Because dynamic industries do not emerge overnight, a number of these were also among the twelve mentioned above.
- E-commerce
- Artificial intelligence software and services
- Cloud services
- Electric vehicles
- Digital advertising
- Semiconductors
- Shared autonomous vehicles
- Space
- Cybersecurity
- Batteries
- Modular construction
- Streaming video
- Video games
- Robotics
- Industrial and consumer biotechnology
- Future air mobility
- Drugs for obesity and related conditions
- Nuclear fission power plants
McKinsey provided considerable detail justifying its choice of the eighteen arenas covering three topics for each: growth, dynamism, and swing factors. Note that most of these are not pie-in-the-sky selections given that they already represent exciting growth areas. The eighteen arenas are expected to account for 10% to 16% of GDP by 2040 as compared to 4% today.
In addition to providing pure intellectual stimulation, the McKinsey paper represents fertile ground for those seeking investment opportunities. Moreover, younger people making college major and career decisions would be well-served by focusing on these dynamic areas of the economy.