Worldwide flows that transmit ideas and expertise are increasing faster than more traditional exchanges of labor, capital and resources

Global Trade Could Boom 

To $85 Trillion By 2025

by JENS ERIK GOULD,

Globalization’s impact on trade used to be relatively straightforward: developed countries outsourced production to low-wage economies in return for cheap goods. Yet as emerging economies develop a robust middle class and gain more access to digital technologies, cross-border exchanges between countries are becoming more complex. They’re also growing at a dizzying pace.

In 2012, cross-border flows of goods, services and finance totaled $26 trillion, or 36 percent of global gross domestic product, according to an April report by the McKinsey Global Institute entitled “Global Flows in a Digital Age.” That proportion was 1.5x higher than it was in 1990, according to McKinsey, which estimates that it could climb to as high as 49 percent, or $85 trillion, by 2025. That increased cross-border trade holds out tremendous opportunities for the global economy, offering countries the opportunity to profit more from their comparative advantages while at the same time facilitating the introduction of new innovations to their domestic markets. The Institute estimates that cross-border flows add as much as $450 billion every year to global GDP.

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Download full report here: www.mckinsey.com

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