Emerging market growth to eclipse Industrial Revolution

The coming decade will present global businesses with an opportunity for growth so large that it will surpass that of the industrial revolution, as a result of the rapid economic transformations occurring in emerging markets.

According to a recent study by the McKinsey Global Institute, by 2025 annual consumption in emerging markets will reach $30trn. In particular, India and China are seeing growth of ten times more than countries during the Industrial Revolution, at far bigger scales.

Britain, the birthplace of the Industrial Revolution, took 150 years to double its economic output per person, says the study, while the US took 50 years. In contrast, China and India have taken just 12 and 16 years respectively.

The report says: “Britain and the United States began industrialisation with populations of about ten million, whereas China and India began their economic takeoffs with populations of roughly one billion. Thus the two leading emerging economies are experiencing roughly ten times the economic acceleration of the Industrial Revolution, on 100 times the scale—resulting in an economic force that is over 1,000 times as big.”

The rapidly increasing middle classes in these regions means there is a clear opportunity for businesses to tailor their operations towards harnessing this consumption. The report add: “The value consciousness of emerging-market consumers, the diversity of their preferences, and their sheer numbers mean companies must rethink every aspect of operations, including product portfolios, research and development, marketing, supply chain management, and talent development.”

The trend of international companies investing in emerging economies has increased steadily over the last decade. Last year, $1.5trn in foreign investment went towards emerging economies, according to McKinsey. This represented a jump to 32 percent of the overall global figure, from the five percent seen in 2000.