Winners of the Future
A new McKinsey report explains that globalization isn’t dead but globalization is being redesigned. I will add that by 2040, cheap labour as a key factor for location and localization of industries will fade. Simply, if Africa hopes that it can become competitive using cheap labour in the next wave of globalization, it will run out of luck. The winners of the future will be nations with the best skills, not those with just cheap labour.
Using alternative measures, we find that services already constitute more value in global trade than goods. In addition, all global value chains are becoming more knowledge-intensive. Low-skill labor is becoming less important as factor of production. Contrary to popular perception, only about 18 percent of global goods trade is now driven by labor-cost arbitrage.
This has been a constant worry for me. Usually, when people talk about Africa as the continent with the youngest Population, they bet on how we can leapfrog our development quagmire through cheap labor just like China did. But the World has moved on from that; with the rise of AI and Robotics, the people-intensive cheap labor can now be fully automated.
On the other hand, every developed Country is driving policies and seeking gains that enables them to be self-sustainable; importing labor isn't one of them.
Africa needs to answer some key questions:
What does it mean to be the Best in this new world?
How can our youths help us in defining that Best?
How do we effectively transit our Numbers (Population) to become Members in executing that Best?
Prof, thank you for sharing.