The future of Asia: Asian flows and networks are defining the next phase of globalization

McKinsey Global Institute | Sep 19, 2019

Asian tiger - The future of Asia: Asian flows and networks are defining the next phase of globalizationAsia is increasingly the center of the world economy. By 2040, the region could account for more than half of global GDP and about 40 percent of global consumption. Global cross-border flows are shifting towards Asia on seven of eight dimensions, and the region’s growth is becoming more broad-based and sustainable as its constituent economies increasingly integrate with each other.

This is a diverse region, but its different parts have complementary characteristics, and powerful networks are developing within Asia. Patterns of globalization are shifting, and these shifts are occurring faster in Asia than elsewhere, suggesting that more than any other region, Asia could shape the way globalization unfolds in the years to come.

This new paper builds on the McKinsey Global Institute’s research on globalization in January 2019 by examining Asia’s rise on eight dimensions incorporating 16 types of flow, looking at the increasing integration of the economies of the region, and highlighting the development of three powerful new Asian networks: industrialization, innovation, and culture and mobility, and the rising cities that are pivotal components of those networks. The paper is one of a series on the Future of Asia, a multi-phase research project that aims to decipher the many facets of Asia.

See:  How Jack Ma’s $290b SME credit engine is changing Chinese banking

The economies of each of these Asias is expected to be comparable in size to any of today’s continents by 2040. China may be comparable to the size of North America by then. Advanced Asia and Frontier Asia and India may each be bigger than the Middle East and Africa combined. Emerging Asia may be comparable with Latin America (see image below):

Advanced Asia

The countries of this group (Australia, Japan, New Zealand, Singapore, and South Korea) have all achieved high levels of per capita GDP of between $30,000 and $60,000, are highly urbanized and connected. They provide technology, capital, and a market for more high-end consumption to the rest of Asia. Their outbound FDI was $1 trillion in 2013–17, accounting for 54 percent of total regional FDI outflows.

China

China, the second largest economy in the world, is big enough and sufficiently distinct from others in the region to stand in its own category, acts as an anchor economy to the rest of the region and as a connectivity and innovation platform for neighboring countries. In 2013–17, it accounted for 35 percent of total Asian outbound FDI. Having built significant innovation capacity, China accounted for 40 percent of the world’s patent applications in 2017.

Emerging Asia

These countries (Bhutan, Brunei, Cambodia, Indonesia, Laos, Malaysia, Mongolia, Myanmar, Nepal, the Philippines, Thailand, and Vietnam) is relatively diverse but tends to have small, highly intraregionally connected economies. The average share of intraregional flows in these economies is 79 percent, the highest of the four Asias. Around 72 percent of trade, 80 percent of capital flows, and 85 percent of people flows in this group are intraregional. These economies provide labor and growth to the rest of Asia while being highly culturally diverse.

See: 

 

Frontier Asia and India

These economies (Afghanistan, Bangladesh, Fiji, India, Kazakhstan, Kyrgyzstan, Maldives, Pakistan, Sri Lanka, Tajikistan, Turkmenistan, and Uzbekistan) historically have had low levels of regional integration. The intraregional share of goods, capital, and people is only 31 percent, the lowest in Asia. They have had a broader range of trading relationships historically. In 2017, Europe, the Middle East and Africa, and North America accounted for 45 percent of these economies’ imports and 66 percent of exports, 56 percent of their FDI inflows, and 53 percent of their FDI outflows. They are major producers of services—notably business services in India—but are also moving into manufacturing, as in Bangladesh. They have young labor forces, and offer new markets as they integrate with the rest of Asia.

Forecasted Asian GDP 2040 - The future of Asia: Asian flows and networks are defining the next phase of globalization

 

Asias potential - The future of Asia: Asian flows and networks are defining the next phase of globalization

Continue to see Asia's forecasted Growth by 2040 -> here

 

 


NCFA Jan 2018 resize - The future of Asia: Asian flows and networks are defining the next phase of globalization The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - The future of Asia: Asian flows and networks are defining the next phase of globalizationFF Logo 400 v3 - The future of Asia: Asian flows and networks are defining the next phase of globalizationcommunity social impact - The future of Asia: Asian flows and networks are defining the next phase of globalization
NCFA Fintech Confidential Issue 2 FINAL COVER - The future of Asia: Asian flows and networks are defining the next phase of globalization