investment: infrastructure and digital … · source: global growth model, mckinsey global...
TRANSCRIPT
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission
of McKinsey & Company is strictly prohibited
Dr. James Manyika April 2016
INVESTMENT: INFRASTRUCTURE AND DIGITAL IMPERATIVES
INVESTMENT: INFRASTRUCTURE AND
DIGITAL IMPERATIVES
McKinsey & Company | 1
Investment – a secular decline,
made worse by the crisis
McKinsey & Company | 2
Change in real GDP, 2008–15
EUR billion, chain-linked 2005, Europe-30
Investment collapsed since the crisis – example Europe
Net
exports
Real GDP
2015
Real GDP
2008
13,291
Statistical
discre-
pancy
-34
-118
Corporate
investment
12,952
Private
consump-
tion
+159
Household
investment
+179
+7
Govern-
ment
consumption
+268
Govern-
ment
investment
-109
INVESTMENT – A SECULAR DECLINE, MADE WORSE BY THE CRISIS
McKinsey & Company | 3
Developed economies
Many developed G20 economies cut public investment after the crisis
1 Value of the government's acquisitions, less disposals, of fixed assets, including dwellings, other buildings, and machinery and equipment.
SOURCE: Global Growth Model, McKinsey Global Institute
Gross Government Fixed Investment
Per cent of region GDP
Country Avg 2000-07 Avg 2010-13
Developing economies
EU 3.6% 3.4%
United States
Japan
Germany
2.8%
2.5%
1.7%
2.5%
1.8%
1.7%
France
United Kingdom
3.4%
1.5%
3.4%
2.0%
Italy 2.3% 2.0%
Canada 2.8% 4.5%
Australia 3.5% 4.8%
Korea, Rep. 3.3% 2.0%
Country Avg 2000-07 Avg 2010-13
China
Brazil
N/A
1.0%
6.5%
1.4%
India 4.4% 5.8%
Russia 2.2% 2.7%
Mexico 2.2% 4.3%
Indonesia 5.2% 3.8%
Turkey 3.8% 3.2%
Saudi Arabia 5.5% 8.3%
Argentina 0.9% 1.2%
South Africa 1.4% 2.4%
INVESTMENT – A SECULAR DECLINE, MADE WORSE BY THE CRISIS
McKinsey & Company | 4
Infrastructure – an unmet need
McKinsey & Company | 5
$3.3 trillion investment needed (3.8% of global GDP), through 2030
Average annual spend, 2016–30
$ trillion, constant 2015 dollars
0.5
0.5
1.0
3.3
0.8 0.3
Telecom Airports Water Power Ports
0.1
Rail Total
0.1
Roads
Roads
Telecom
Ports
Water
Airports
Rail
Power
xx Spend as
% of GDP
xx Aggregate
spend 2016-30,
$ trn, constant
2015 dollars
0.9 0.4 0.1 0.1 1.1 0.6 0.6 3.8
11.4 5.1 0.9 1.3 14.7 7.5 8.3 49.1
INFRASTRUCTURE – AN UNMET NEED
McKinsey & Company | 6
Actual infrastructure spend
2008-13
4.7
2.2
2.0
2.1
2.4
2.42.52.7
3.13.53.6
4.04.54.6
4.75.2
7.68.8
India
Qatar
South Africa
Australia
China
Turkey
Saudi Arabia
Brazil
United States
Mexico
Italy
Japan
Indonesia
France
United Kingdom
Canada
Russia
Germany
Wide variation of infrastructure investment gaps by geography % of GDP
Gap to estimated infrastructure needs
2016-30
0
0.4
France -0.1
UK 0.4
0.4% or USD$5.2trn
US
1.3
0.9
0.6
Canada
Australia
Turkey
S.Africa
S.Arabia
India
Qatar -0.3
0.5
Indonesia
-1.2
Russia
1.2
-3.3
-0.1
Mexico
-1.5 Japan
0.7
-0.1
China
Brazil
1.1
0.7
Germany
Italy
SOURCE: McKinsey ISS database
1.Global gap for 2016-30 calculated by adding up negative values and
multiplying up to USD total and then dividing by cumulative world GDP.
Without adjusting for positive gap the value is 0.2%. This has been calculated
from a set of 49 countries where we have data available for all sectors
Global Gap
INFRASTRUCTURE – AN UNMET NEED
McKinsey & Company | 7
Likely sizable impact from closing infrastructure investment gaps
GDP impact of closing estimated infrastructure investment gaps; example countries
0.6
1.3
1.5
Global United States Brazil
Supply-side long-term incremental GDP potential after ten years of
additional investment
%
INFRASTRUCTURE – AN UNMET NEED
McKinsey & Company | 8
Digitization – an investment, innovation,
and productivity imperative
McKinsey & Company | 9
Relatively low
digitization
Relatively high
digitization
Digital leaders within relatively un-digitized sectors
1 Based on a set of metrics to assess digitization of assets (8 metrics), usage (11 metrics), and labor (8 metrics); see technical appendix for full list of metrics and explanation of methodology.
2 Compound annual growth rate.
The MGI Sector Digitization Index 2015 or latest available US data
SOURCE: BEA; BLS; US Census; IDC; Gartner; McKinsey social technology survey; McKinsey Payments Map; LiveChat customer satisfaction report;
Appbrain; US contact center decision-makers guide; eMarketer; Bluewolf; Computer Economics; industry expert interviews; McKinsey
Global Institute analysis
DIGITIZATION – AN INVESTMENT, INNOVATION AND PRODUCTIVITY IMPERATIVE
Selected sectors Overall digitization Assets Usage Labor
ICT
Media
Professional services
Finance and insurance
Wholesale trade
Advanced manufacturing
Oil and gas
Utilities
Chemicals and pharmaceuticals
Basic goods manufacturing
Real estate
Transportation and warehousing
Education
Retail trade
Personal and local services
Government
Health care
Hospitality
Construction
Digitization assessment categories
1 Knowledge-intensive sectors
that are relatively highly digitized
across most dimensions 1
2 Capital-intensive sectors with
the potential to further digitize
their physical assets
2
4 B2B sectors with the potential
to digitally engage and interact
with their customers
4 3 Service sectors with long tail of
small firms having room to
digitize customer usage
3
Quasi-public and large with
relatively low digitization across
the board and low productivity
6 6
5 Labor-intensive and large with
the potential to provide digital
tools to their workforce
5
Still very busy
McKinsey & Company | 10
Gap widening between the most digitized and the rest
Leading sectors in 1997 = 100%
Rest of US
economy,
degree of
digitization
relative to leaders 8%
1997
1.7x increase in
digitization
12%
2005
4.1x increase in
digitization
14%
2013
1997 2005
11%
1.0x 39%
4.9x
2.1x
48%
2013
1.2x
22% 14%
2.0x 1.0x
10%
Most digitized sectors
Rest of US economy
Usage
Assets
Labor
2.6x
6%
1.0x
4% 7%
7.9x
Option 2
DIGITIZATION – AN INVESTMENT, INNOVATION AND PRODUCTIVITY IMPERATIVE
McKinsey & Company | 11
Even among large corporations,
a large gap between digital leaders and the rest
SOURCE: 2014–15 McKinsey Digital Quotient company survey; “Raising your Digital Quotient,” McKinsey Quarterly,
June 2015
4
54
84
74
64
44
24
14
Low
Med
Established
Emerging
Average = 34
Emerging
leaders
Established
leaders
Digital Quotient score
SHIFT TO A MORE DIGITAL ECONOMY 5
McKinsey & Company | 12
Cross-border data flows are surging and connecting more countries,
gaining importance vis-a-vis traditional trade flows
SOURCE: TeleGeography; McKinsey Global Institute analysis
Used cross-border bandwidth
1 Estimated using public Internet bandwidth data.
20051
100% = 4.7 Terabits per second (Tbps)
Size of bubble represents
intraregional used bandwidth
NA United States and Canada
LA Latin America
AA Africa
EU Europe
ME Middle East
OC Oceania
AS Asia
Regions Bandwidth
Gigabits per second (Gbps)
<50
50–100
100–500
500–1,000
1,000–5,000
5,000–20,000
>20,000
NA
LA
ME
AF
EU
OC
AS
45x
2014
100% = 211.3 Tbps
NA
LA
ME
AA
EU
OC
AS
DIGITIZATION – AN INVESTMENT, INNOVATION AND PRODUCTIVITY IMPERATIVE
McKinsey & Company | 13
… One more thing
McKinsey & Company | 14
THIS REPORT AND OTHER MGI RESEARCH ARE AVAILABLE AT: WWW.MCKINSEY.COM/MGI
THIS REPORT AND OTHER MGI
RESEARCH ARE AVAILABLE AT:
WWW.MCKINSEY.COM/MGI
@ mckinsey_mgi
McKinseyGlobalInstitute