An ongoing shift in global economic activity from developed to developing economies, accompanied by growth in the number of consumers in emerging markets, are the global developments that executives around the world view as the most important for business and the most positive for their own companies$$ profits over the next five years. Executives also identify two other critical positive aspects of globalization: technologies that enable a free flow of information worldwide and, increasingly, global labor markets. These four trends, of the ten we asked about, also are the ones that the biggest share of respondents$$around half$$say their companies have taken active steps to address. In this sixth annual survey asking executives about the forces shaping the world economy,$1$ there is little change in how respondents view the importance of global trends compared with previous

years$$either for business in general or for their own companies$$ profits $($Exhibit $1).$ Clearly, the financial crisis and economic downturn have not shaken these key trends. Continued faith in the positive effects of globalization combined with a move away from short$-$term planning likely reflects rebounding optimism about global economic prospects and is consistent with the findings of other McKinsey surveys on the economy$\mathrm{.}2$

In addition to our annual questions on individual global trends, this year$$s survey explores for the irst time five interconnected themes that highlight the opportunities and challenges faced by

global economic integration itself and by companies seeking to profit from it: growth in emerging

markets; labor productivity and talent management; the global flow of goods, information, and

capital; natural$-$resource management; and the increasing role of governments.

$1$ The online survey, in the field in

March $2010,$ generated responses

from $1,416$ executives around the

world, representing the full range

of industries, regions, functional

specialties, and seniority$.$

$2$ See, for example, $$Economic

Conditions Snapshot, April $2010$:

McKinsey Global Survey results,$$

mckinseyquarterly.com, April $2010.$

Jean$-$Fran$$ois Martin

Five forces reshaping the global economy

McKinsey Global Survey results:

$2$ McKinsey Global Survey results Five forces reshaping the global economy

The findings show that the global economy faces significant challenges as it continues to integrate.

For example, most respondents$63$ percent$$expect increased overall volatility to become a permanent

feature of the global economy, and another $23$ percent see sharply higher levels of volatility that will

undermine the economy$$s robustness. In addition, high levels of public debt are a headache in Europe

and North America, where most executives fear the debt will have a negative impact on GDP growth.

There are specific corporate challenges too. Half of the respondents are only somewhat optimistic they will

be able to find the right talent to meet their companies$$ strategic goals. Likewise, only half of the executives

reported that their companies have taken steps to address the shift in global economic activity from

developed to developing economies$$the force that is reshaping the global economy more than any other.

Growth and risk management in emerging markets

Emerging markets, with populations that are young and growing, will increasingly become not

only the focus of rising consumption and production but also major providers of capital, talent,

Exhibit $1$

How global trends affect profits

Survey $2010$

Global forces

Exhibit $1$ of $6$

Glance:

Exhibit title: How global trends affect profits

$\%$ of respondents$1$

$1$ Respondents who answered $$neutral$$ or $$don$$t know$$ are not shown.

Impact of trends on companies$$ profitability

over the next $5$ years Very$/$somewhat positive Somewhat$/$very negative

Growth of consumers in emerging economies$/$changing

consumer tastes

$4$

$4$

Development of technologies that empower consumers

and communities $($eg$,$ online connectivity$)$

$5$

$6$

Increase in labor productivity in developed markets $7$

N$/$A

Shift of economic activity between and within regions $14$

$12$

Increasingly global markets for labor and talent $11$

$10$

Growth of public sector

Increase in sophistication of capital markets

$14$

$15$

Growth in consumer demand for corporate contributions

to the broader public good

$9$

$13$

$10$

$13$

Increase in constraints on supply or usage of natural

resources $($eg$,$ regulations$)$

$25$

$28$

Geopolitical instability $39$

$38$

$64$

$58$

$63$

$64$

$52$

N$/$A

$51$

$48$

$50$

$52$

$39$

$44$

$32$

$33$

$32$

$30$

$31$

$31$

$16$

$14$

Apr $2010,$ n $=1,416$

Mar $2009,$ n $=1,088$

$3$ McKinsey Global Survey results Five forces reshaping the global economy

and innovation. This will make it imperative for most companies to succeed in emerging markets. However, no more than $40$ percent of executives at companies headquartered in developed economies expect a quarter or more of revenues over the next five years to come f