The McKinsey Global Institute’s report, "The Next Big Arenas of Competition", is a timely and ambitious exploration of industries set to shape the global economy.
The report identifies 18 transformative arenas: industries characterised by exceptional growth, dynamism and innovation. It estimates that these industries could contribute $48-trillion (R876-trillion) in revenues by 2040.
While the report makes a compelling case for the transformative potential of these arenas, its assumptions and conclusions reveal a persistent bias in how Africa and the Global South continue to be marginalised by Western think-tanks.
Before we discuss the shortcomings, let us reflect on aspects of the report that are insightful. McKinsey categorises future industries into three groups:
- continuing arenas (such as e-commerce and cloud services) which are already well-established;
- spin-offs (such as AI services) that emerge as sub-segments of larger industries; and
- emergent arenas (these include shared autonomous vehicles and nuclear fission).
The latter, according to the research, represents new frontiers. The industries mentioned are characterised by three critical features: technological breakthroughs, significant investments to sustain innovation, and markets.
The analysis is useful for identifying opportunities in innovation-driven economies and provides insights into the conditions that facilitate rapid industrial growth, offering a roadmap for investors and policymakers.
While the report offers a useful frame for understanding global industrial trends, it largely reflects the perspectives of developed economies as drivers of the global economy. It bases this on factors such as availability and access to capital, advanced infrastructure and established innovation ecosystems. Of course, Africa and the Global South lag on these.
There would have been nothing wrong for the think-tank to declare that its focus is on industries and companies concentrated in North America, Europe and parts of Asia. Though some of the identified arenas such as AI, modular construction and renewable energy have been identified by other reports — including those of the African Development Bank — as presenting structural transformation opportunities for Africa, this is not treated as a frontier in the report.
The assumptions underpinning the report are vulnerable to geopolitical shifts
Even the IMF with its history of marginalising Africa has made some references to these arenas as posing growth potential. The potential of the burgeoning informal economy — which, in fact, is transiting into formal, alongside the demographic dividend, is de-emphasised in the report.
It gets worse. Not much attention is paid to the possibilities of Africa industrialising through the beneficiation of critical minerals. This is a major shortcoming. Western think-tanks need to explore this, lest they be perceived as continuing the trend of seeing Africa only as supplier of natural resources.
There is also a dynamic rapid urban transition that is not being considered in the report. The report primarily references policy frameworks from the Global North, while overlooking industrial policies from developing nations such as China, India and Brazil. This is part of a narrative that downplays the Global South.
By not rigorously engaging with Africa and the Global South in the report, the trajectory of industrial growth is assumed to mirror and track that of the Global North in the future. There is no suggestion that Africa can catch up.
Of course, there are serious barriers to entry for developing countries. There might be limited digital infrastructure and low human capital formation, but there is more to African economies than this old caricature. It is all about reimagined futures. The growth of semiconductors and electric vehicles cannot be accelerated without cobalt and lithium mined in Africa. If there is commitment to create value chains within Africa, the storyline might change.
The underrepresentation of Africa and the Global South in the report reflects a tradition among Western think-tanks to treat these regions as peripheral. Historically, the Global South has been framed as a supplier of critical inputs which are necessary for industrialisation in the Global North. Africa is largely presented as a consumer market rather than an innovation hub, which overlooks ITS technological advancements.
For instance, African-led innovations like M-Pesa’s mobile banking revolution, and AI developments in Kenya and Nigeria, are notable but absent from the report. In fact, the "E-Governance in Africa: Progress and Prospects" report published by the Russia’s Higher School of Economics in 2024 does a better job. It maps e-governance initiatives across Africa, demonstrating frontiers of technological innovation and modernisation of public services using AI-powered tools.
The assumptions underpinning the report are vulnerable to geopolitical shifts. With Donald Trump’s administration prioritising reindustrialisation in the US, global supply chains will be reconfigured. Efforts to reduce dependence on foreign resources could disrupt the dynamics of industries like semiconductors and EVs.
Further, while the report assumes that increased internet access and mobile penetration will drive economic inclusion, it does not sufficiently address deeper structural issues such as digital literacy, affordability and financial inclusion challenges in the Global South.
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