McKinsey Global Institute 2024 in Charts: 18 Arenas Shaping the Future Economy

What Are McKinsey’s “Arenas of Competition”?

McKinsey defines arenas of competition as industries that exhibit two defining characteristics: high growth and high dynamism. Unlike stable, mature sectors where market leadership changes gradually, arenas constantly reshuffle their competitive order, triggered by breakthroughs in technology or business models. Between 2005 and 2020, just 12 arenas—including e-commerce, cloud services, electric vehicles, and biopharmaceuticals—generated more than twice the revenue growth and triple the market capitalization growth of other large industries.

These arenas created new global giants: Amazon transformed retail, Tesla redefined automotive, and AWS built the infrastructure layer of the digital economy. The pattern is clear—understanding where arenas emerge is essential for anyone allocating capital or building strategy in the modern economy. The IMF’s global economic projections increasingly incorporate the disproportionate impact of these dynamic sectors on GDP growth.

The 18 Industries McKinsey Expects to Transform by 2040

Looking forward, McKinsey identifies 18 industries with the potential to become the next arenas of competition. Their combined projected revenues of $29–$48 trillion by 2040 represent an extraordinary expansion, with their collective share of global GDP potentially rising from 4% to as much as 16%. Here are the key sectors:

Technology and Digital Services

• AI Software and Services ($920B by 2040): Artificial intelligence is expected to become ubiquitous across industries, from healthcare diagnostics to financial modeling, creating the largest new arena in terms of transformative impact.
• Cloud Services ($1.6–$4.6T by 2040): The migration to cloud continues to accelerate, with enterprises increasingly dependent on scalable, on-demand computing infrastructure.
• Cybersecurity: As digital infrastructure expands, the demand for protection against data breaches and cyberattacks is growing exponentially, creating a critical arena for innovation.
• Digital Advertising ($2.9T by 2040): The shift from traditional to digital media continues, with AI-powered targeting and programmatic buying driving efficiency and reach.
• Semiconductors ($2.4T by 2040): The backbone of modern technology, demand for advanced chips accelerates driven by AI, IoT, and next-generation computing.

Mobility and Transportation

• Electric Vehicles ($2.5–$3.2T by 2040): Battery technology improvements and declining costs will make EVs the dominant form of personal transportation globally.
• Shared Autonomous Vehicles ($2.3T by 2040): The convergence of autonomous driving and ride-hailing creates a massive new market for urban mobility.
• Future Air Mobility ($340B by 2040): Electric vertical takeoff and landing vehicles (eVTOLs) and commercial drones could revolutionize short-distance transportation.
• Space ($1.6T by 2040): From satellite services to space tourism and deep-space exploration, the commercial space industry is entering a new era of growth.

Energy and Sustainability

• Batteries ($1T+ by 2040): Critical for both EVs and grid-scale energy storage, battery technology is central to the green transition.
• Nuclear Fission ($150B by 2040): New reactor designs and improved safety technologies position nuclear as a key component of the low-carbon energy mix.

Healthcare and Life Sciences

• Drugs for Obesity and Related Conditions ($280B by 2040): Revolutionary treatments like GLP-1 receptor agonists are creating an entirely new pharmaceutical category with massive demand.
• Industrial and Consumer Biotechnology ($900B by 2040): Beyond healthcare, biotech innovations will transform agriculture, food production, and materials science.

Consumer and Industrial

• Streaming Video ($1T by 2040): The transition from linear television to streaming continues, with new platforms and content models emerging.
• Video Games ($910B by 2040): VR, cloud gaming, and social gaming platforms drive continued expansion of the gaming industry.
• Robotics ($910B by 2040): Industrial automation and consumer applications create significant growth in manufacturing, healthcare, and services.
• Modular Construction ($1.1T by 2040): Prefabricated building solutions address the global housing affordability crisis while improving construction efficiency.

The Arena-Creation Formula: What Drives Transformative Growth

McKinsey identifies an “arena-creation potion” consisting of three essential ingredients that produce extraordinary growth and dynamism:

1. Technology or Business Model Step-Change: A fundamental breakthrough that transforms how products and services are delivered. Lithium-ion battery advances enabled EV scalability; cloud computing revolutionized IT infrastructure; mRNA technology created new vaccine capabilities. Each arena begins with an innovation that makes the previously impossible commercially viable.

2. Competitive Escalation of Investments: Once an arena begins forming, companies engage in an escalatory investment cycle—investing to scale and scaling to invest. The six biggest technology companies increased their combined capital expenditures and R&D spending 12-fold since 2010 to $410 billion in 2023. This arms race creates winner-take-most dynamics that reward bold, early commitments.

3. Large or Growing Addressable Market: Arenas either disrupt existing large markets or create entirely new demand categories. The combination of technological feasibility and market size creates the conditions for sustained, exponential growth that characterizes these transformative industries.

McKinsey’s Five Core Research Themes in 2024

The 2024 in Charts compilation organizes McKinsey Global Institute’s research around five interconnected themes that together paint a comprehensive picture of the global economic landscape:

Economic Productivity and Growth

McKinsey’s research shows that global productivity growth has slowed significantly in recent decades, creating a widening gap between potential and realized economic output. The charts illustrate how different regions and sectors contribute to productivity, highlighting the transformative potential of AI and digital technologies to reverse this trend. Understanding these dynamics is crucial for investors evaluating corporate performance relative to macroeconomic trends.

The Future of Work and Labor Markets

Automation, AI, and shifting workforce demographics are reshaping labor markets globally. McKinsey’s data visualizations show how job displacement and creation will affect different sectors and skill levels, with significant implications for education policy, workforce development, and social safety nets. The transition will create enormous opportunities for workers who adapt while presenting challenges for those in roles susceptible to automation.

AI’s Transformative Impact Across Industries

AI features prominently across multiple charts, reflecting its role as a horizontal technology that enhances virtually every sector. From healthcare diagnostics to financial services, manufacturing to logistics, AI’s productivity-enhancing capabilities are quantified across industries. The data supports the thesis that we are entering an AI-driven economic era comparable to previous industrial revolutions in scope and impact.

Energy Transition and Sustainability

The green transition represents one of the largest economic transformations in history, and McKinsey’s charts track progress across renewable energy deployment, electric vehicle adoption, battery cost curves, and carbon emission trajectories. The data reveals both encouraging progress and significant gaps between current trajectories and climate targets, with implications for energy investment strategies and policy.

Competitive Arenas and Global Trade

Building on the arenas framework, McKinsey examines how geopolitical shifts, trade fragmentation, and regional competition are reshaping global value chains. The charts show how supply chain diversification, nearshoring trends, and technology competition between major powers are creating both risks and opportunities for businesses and investors.

Three Critical Swing Factors for the Arenas of Tomorrow

McKinsey identifies three variables that could fundamentally alter the development trajectory of the 18 emerging arenas:

Geopolitical Shifts: Regulation of innovation, trade turbulence, increased barriers, and regional fragmentation could cause companies to adopt greater regional focus. The WTO’s analysis of trade fragmentation corroborates McKinsey’s concern that geopolitics could slow or redirect the development of several arenas, particularly in semiconductors, AI, and space.

AI Acceleration: The speed and depth of AI advancement could fundamentally reshape multiple arenas simultaneously. AI’s ability to enhance drug discovery, optimize energy systems, improve autonomous driving, and transform manufacturing means its development timeline directly impacts the growth trajectory of nearly every arena identified.

Green Transition Pace: Government commitment, consumer behavior, and business investment in decarbonization will determine whether climate-related arenas like batteries, EVs, and nuclear energy reach their revenue potential. The gap between net-zero pledges and current policies creates significant uncertainty about the pace of this transition.

Investment Implications of McKinsey’s 2024 Charts

For investors, McKinsey’s arena framework offers a powerful lens for portfolio construction and opportunity identification. The data suggests several strategic considerations:

• Early-stage arena exposure: Industries in the early formation phase offer the highest potential returns but also the greatest uncertainty. AI software, shared autonomous vehicles, and space represent current opportunities in this category.
• Infrastructure plays: Enabling technologies like semiconductors, batteries, and cloud services benefit from growth across multiple arenas, providing diversified exposure to the broader transformation.
• Disruption risk assessment: Incumbents in sectors facing arena-driven disruption—traditional automotive, linear television, conventional construction—face significant headwinds that should be reflected in portfolio positioning.
• Geographic diversification: Arena development varies by region, with different competitive advantages and regulatory environments favoring different players in different markets.

The Federal Reserve’s assessment of financial stability increasingly considers the systemic implications of rapid technological transformation and the concentration of market value in arena-dominant companies.

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Comparing Today’s Arenas with Tomorrow’s Opportunities

What McKinsey’s Research Means for 2025 and Beyond

The McKinsey Global Institute 2024 in Charts report serves as both a retrospective and a roadmap. The data visualizations reveal that while the global economy faces significant headwinds—from geopolitical fragmentation to slowing productivity—the emergence of new competitive arenas creates unprecedented opportunities for value creation.

For business leaders, the message is clear: identify which arenas your industry intersects with, invest boldly in the technologies and capabilities that will define competitive advantage, and prepare for the creative destruction that arena formation inevitably brings. For investors, the framework offers a systematic approach to identifying where the next decade’s outsized returns are likely to emerge.

The pace of change is accelerating. The 12 arenas that formed between 2005 and 2020 transformed the global economy in ways few could have predicted. The 18 arenas of tomorrow promise even greater transformation, with implications that extend far beyond financial markets to reshape societies, labor markets, and the very structure of the global economy.