The economic power shift: New global dynamics powered by technology and innovation in emerging markets

The global economy has undergone fundamental changes over the last 20 years. The financial crisis in 2007–8, technology boom, and fast growth in emerging economies like China and India have all reshaped the economic dynamics around the world.

Commodities have lost their relevance in the global market, opening the way for technology to set new market rules. As a result, IT and consumer-driven stocks have predominantly become the backbone of the new economy.

In the 2007 MSCI Emerging Market Index, energy represented 18 percent and materials 15 percent, and together accounted fully for one third of the total shares, showing that commodities were still highly valuable for the global economy.

However, ten years later, the economic reality has shifted. The 2017 Index shows that those two sectors combined account for only 14 percent. Meanwhile, information technology has risen to 28 percent of the index, from 10 percent a decade ago.

One of the greatest drivers of the technology boom was the shift in mindset that followed the global economic crisis. People and society have become more conscious and as such have geared towards products and services that can provide an added value and have a positive lasting impact in society. Technology is the enabler to build tools and systems that contribute to a more balanced economy, clearly reflected in the market value of technology products.

Technology has challenged the status quo in virtually every sphere — from digital banking to personal virtual assistants, and will continue to do so as it develops. McKinsey estimates that applications of the disruptive technologies technologies could have a potential economic impact of between $14 trillion and $33 trillion a year in 2025. More than creating something new, these technologies are highly focused on increasing consumer and social value, especially in areas such as financial services, healthcare and access to information.