No breaking value chain – The Economic Times

Ours is an interdependent world, connected by global flows of goods, services, capital, people, data and ideas. Global value chains have been built on these flows, creating a more prosperous world. However, in light of the pandemic, Russia‘s invasion of Ukraine and years of rising tensions between the US and China, some have speculated that the world is already deglobalising.

New McKinsey Global Institute analysis finds a more nuanced reality. The world remains deeply interconnected, and flows have proved remarkably resilient during the most recent turbulence. Furthermore, no region is self-sufficient. The challenge, therefore, is to harness the benefits of interconnection while managing the risks and downsides of dependency – particularly where products are concentrated in their places of origin….

Growth in global flows is now being driven by intangibles, services and talent. They have picked up the baton from goods trade, whose growth as a share of the global economy stabilised around 2008 after 30 years of rapid expansion. Flows of services, international students and intellectual property grew about twice as fast as goods flows during 2010-19. Within services, flows of knowledge-intensive services – including professional services, government services, IT services and telecommunications – are growing the fastest. Data flows grew at nearly 50% annually.

From ‘Global Flows: The Ties That Bind in an Interconnected World’, McKinsey & Co