Since the early 17th century, New York has been a global hub for the flow of goods, capital, people, and ideas. It has experienced constant economic transformation, dominating first in the fur trade, then in shipping, sugar refinement, machine tools, the garment trade, business services, and finance. Through its evolution, New York has grown not only as a center of innovation but also as a catalyst for progress around the world.

Today, the New York metropolitan area’s biggest sectors include financial services, healthcare, professional services, retail, and education. Those five sectors employ more than four million residents and generate more than a trillion dollars in annual revenues—more than half of the region’s GDP. Technology is also one of the fastest-growing sectors in New York.

And while core sectors have persisted and evolved, the past 400 years have shown that today’s leading industries may not be the industries that generate waves of job creation, wage increases, living standards, or economic growth in the decades to come. The time has come for New York’s bold, imaginative leaders—in communities, industry, academia, government, and civic organizations—to join forces and reinvent New York once again.

Recent research by the McKinsey Global Institute (MGI) suggests that 18 arenas of competition, a unique category of industries defined by high growth and dynamism, that includes e-commerce and cloud services, could reshape the global economy in the next ten to 15 years (see sidebar, “The 18 arenas of competition”). The 18 arenas will generate outsize economic growth, raise productivity in other fields, transform lives, and—if the companies in the arenas have operations or headquarters in the region—build on New York’s global leadership.

We believe the future of the New York region will be built on strategic investment, inclusion, and collaboration in these arenas; they promise innovation and revolutionary productivity, they are likely to see an abundance of new entrants, and they could transform the urban fabric. From industry-leading technologies to medical breakthroughs and cultural transformation, this next wave of evolution will require leaders to bring everyone to the table, think boldly, and act decisively.

The New York of 2040 isn’t just a dream—it’s a destination. It’s a future shaped by bold ideas, collective action, and a relentless commitment to progress. The region that is home to the city that never sleeps is waking up to a new day, ready to lead the world into tomorrow.

The future growth arenas poised to transform New York’s economy

New MGI research has identified a set of arenas that reshaped the global economy in the past couple decades, as well as a set of emerging arenas that are likely to reshape the global economy again over the next 15 years.

We define arenas as dynamic industries with high growth in revenue and market capitalization. Three elements consistently underpin these dynamic features: disruptive advances in technology or business models, escalating investments that rapidly improve product or service quality and spur a race to the top, and high demand in global markets. In short, they are relatively small segments of the industrial landscape that are responsible for most of the transformative change in each economic era.

To understand arenas of the future, we can look to the past. From 2005 through 2020, only a dozen of 57 major industries exhibited the high growth in revenue and market value to reach arena status. These arenas showed remarkable features, including higher economic profits, doubled research and development intensity, and more revenue from outside their home countries than companies in non-arena industries.

Arenas have shaped New York’s growth. Since 2005, for example, the five largest sectors in the region have been real estate, professional services, financial services, IT, and healthcare, which together accounted for about 80 percent of New York’s GDP growth, growing about 3.5 percent annually, on average (Exhibit 1). That overall growth in New York’s traditional core sectors benefitted from industry tailwinds within those sectors undergoing transformative change.

For example, the consumer internet, software, and video and audio entertainment industries are each a small portion of the IT sector; they respectively grew by 21 percent, 12 percent, and 8 percent globally from 2005 to 2020 because of increased investment and technological advancements.

In the financial services sector, although most of the GDP growth in financial services came from traditional industries such as commercial banking, revenue growth in payments outpaced the rest of the sector. New York’s manufacturing sector shrank in the 2005–23 period, but industries within the sector—such as biopharmaceuticals, consumer electronics, electric vehicles (EVs), industrial electronics, and semiconductors—all grew more than 6 percent per year.

While the professional services sector grew at a rate above 3 percent in the same period, cloud services and information-enabled business services grew 17 percent and 7 percent globally. And e-commerce contributed significantly to the growth of New York’s retail trade sector, growing at 31 percent globally.

As we look to the future, there are 18 future arenas with the potential to unlock $29 trillion to $48 trillion in revenues by 2040. This is up to a third of global GDP growth in the next 15 years, even though these arenas account for just 4 percent of GDP today (Exhibit 2).

Some innovations stem from global digital disruption—e-commerce, digital ads, AI, cloud computing, and cybersecurity—while others blend digital with physical, such as EVs, autonomous vehicles, robotics, future air mobility, and space. Advances in modular construction, new drugs, and nuclear fission could reshape housing, health, and energy. In this article, we present a perspective on how these future arenas could shape New York’s future economy, as explained through the following three categories:

1. arenas where New York companies are already poised to compete and lead
2. arenas that may unlock significant growth in other leading industries in the metropolitan region
3. arenas that could create transformative improvements in the daily lives of New Yorkers

Our in-depth analyses of emerging industries and their potential impacts on New York highlight their capacity to propel substantial economic growth and reshape R&D and investment capital flows. This assessment of New York’s business landscape explores drivers of sector success, including employment and GDP composition, early-stage investment flows, and innovation trends such as patent applications. We highlight arenas where New York organizations are well positioned to tackle future challenges.

However, New York’s competitive advantage in these arenas will only materialize with sustained commitment to action, and it remains susceptible to broader macroeconomic shifts. While all 18 arenas may influence the overall economy and productivity, our analysis identifies a subset of arenas in which New York is currently best positioned. And while we highlight where New York’s companies are currently poised to lead, there is also opportunity in arenas where New York may not lead currently but might want to invest to develop an advantage when considering their global growth potential.

The following sections explore these critical growth arenas and their implications for New York’s future across the three categories of impact above.

Arenas already poised for growth in New York

New York is well positioned for economic growth in arenas where a significant number of its companies directly compete. These arenas are nested within prominent sectors that employ a material share of New York’s labor force, contribute significantly to the economy, and attract major investments—and could therefore help the metropolitan region maintain its leadership. Examples include e-commerce within the retail sector; digital ads, streaming video, and cybersecurity within information and communications technology; and breakthrough drugs for obesity and related conditions within the pharmaceuticals industry. Our research suggests that these five arenas of the future could grow at an average of 8 to 11 percent per year globally. And given New York’s advantages, they could grow even faster there.

E-commerce

E-commerce is a digital descendant of New York’s retail and commercial traditions, which originally developed alongside manufacturing, trade, and tourism. Today, many brick-and-mortar stores have given way to online shops, and New York has innovated to emerge as a leader in e-commerce.

There is ample reason to believe that e-commerce will continue to be an arena through 2040, despite already being an established industry that has grown significantly for decades. The industry accounted for 16.6 percent of a $29 trillion global retail market in 2024, which is sizable but still leaves room to grow, especially as developing economies continue to digitalize and e-commerce companies expand into new product categories such as personal care and food.

The region is now home to more than 300 e-commerce start-ups and, according to our research, has attracted more than $23 billion in private equity (PE) and venture capital (VC) investment since 2019, ranking first among the 20 largest US metropolitan areas with more than 36 percent of cumulative e-commerce and mobile commerce investment (Exhibit 3). While Seattle-based Amazon continues to innovate, originating almost 40 percent of US e-commerce spend in 2023, New York’s employment concentration in e-commerce is still on par with peers (partially through Amazon’s New York–based employees) and is on track to continue sharing in the outsize growth of the arena.

Accelerating digital technologies: Digital advertising, streaming video, and cybersecurity

Historically, New York has been one of the largest hubs for innovators and emerging digital industries, and this trend continues with digital ads, streaming video, and cybersecurity. The digital ad space starts from a larger base, with global revenues that could grow to $2.1 trillion to $2.9 trillion by 2040, based on our research, while the streaming video and cybersecurity together could reach $1.1 trillion to $2.2 trillion—fertile markets for New York–based companies. While New York’s share of employment in these and related industries is low, the portion of GDP that they generate is materially larger, suggesting that these digital technology industries are more productive than others and increased investment or employment could yield significant growth.

Digital advertising funds much of the internet and is likely to keep growing as wealth, high-speed internet access, and digital media consumption rise. Digital ads will continue to improve as companies create more places to display digital ads, such as on rideshare apps or in video games.

For decades now, New York has been the base of the US advertising ecosystem, and the continued strength of digital ads in New York could continue to cascade globally. While many of the companies that sell advertising are now based on the West Coast, New York is still the hub for ad buyers and digital adtech companies, as evidenced by the investments pouring into the region: In the past five years, New York has attracted more than half of the cumulative PE and VC financing flowing into advertising technology across the top 20 metropolitan areas in the United States.

New York also ranks second among the top 20 metropolitan areas in the number of granted patents in the digital advertising space, indicating substantial innovation in the region, especially considering that the top three metro areas account for more than half of the total activity across the top 20. Coupled with a larger share of workers in advertising, PR, and related fields, it is well positioned for digital ad growth. (Exhibit 4).

Streaming video will likely grow as more households across the world gain high-speed internet access. Since 2019, the region has attracted more than $2.8 billion in PE and VC investments in streaming-related industries, accounting for 25 percent of capital investment across the top 20 US metro areas—second only to Los Angeles at 40 percent. New York is a center of streaming innovation, with only San Francisco and Los Angeles generating more streaming-related patents from 2015 to 2024. The region’s proximity to major media companies, production studios, and top creative and technical talent makes it a prime hub for high-caliber streaming content. This sector has transformed global media consumption, creating significant growth opportunities for content creators, media companies, distributors, and advertisers.

The cybersecurity industry is also buzzing to become an arena in 2040. The industry is growing rapidly as cyberattacks become more frequent, complex, and costly, reaching into the trillions of dollars every year. Protecting personal and proprietary data will remain a priority, fueling continued investment. Cybersecurity, part of the broader IT infrastructure sector, is not as nascent as other sectors and already accounts for 4 percent of New York’s GDP. From 2019 to 2024, the region secured 15 percent of US PE and VC cyber investments, trailing only Miami (28 percent) and San Francisco (16 percent). As a global financial hub with more than 300,000 businesses, New York could be natural leader in cybersecurity.

But despite this potential, a talent gap remains. With about 20,000 cybersecurity job openings in New York as of 2024, attracting the right talent will be a headwind in the industry. Closing this gap will not only strengthen security but also propel economic growth and efficiency across industries.

Breakthroughs in pharmaceutical industries

Drugs for obesity and other chronic conditions may also be an arena in 2040 based on the growing burden of chronic diseases, many linked to obesity. As the US population ages, the potential market for drugs for obesity and other chronic diseases presents major opportunities for the region’s pharmaceutical sector, which ranks first in the nation in talent.

This strength is reinforced by New York’s deep public and private investment and world-class research institutions. New York is third to Boston and San Francisco out of US metropolitan areas in patents granted with a focus on drugs for obesity and other noncommunicable diseases, and the region has been experiencing 17 percent growth in granted patents since 2015.

Pharmaceuticals contribute 1.3 percent to New York’s GDP, and 13 of the 20 largest biopharmaceutical companies have a significant presence in the region.[[footnote 15 As an example of pharmaceuticals’ potential, GLP-1s are one of the ways pharmaceuticals are looking to address the global rise of obesity, which is considered a crisis due to its association with comorbidities and early mortality. This makes leadership in this space and other similar drug categories important to global health, as well as economically advantageous. With its strong talent base fueling the development of transformative inventions, there is a strong case to be made for New York to drive and capture growth stemming from advancements in drugs for obesity and other chronic conditions.

Other key considerations

Technological advances in these arenas could reshape the New York region but may also widen existing inequalities. The evolving labor market could favor those with better access to technology and education, potentially displacing others. Addressing these disparities requires investment in education and upskilling. For example, companies trying to close their cybersecurity talent gaps could prioritize upskilling current employees, leaving entire talent pools outside the industry even farther behind. Likewise, advances in obesity treatments raise questions about equitable access because less-affluent people are both more likely to experience obesity and less likely to be able to afford such treatments. Policies ensuring equitable access and mitigating negative impacts will be essential.

Arenas that unlock growth for other leading New York sectors

We analyzed arenas whose innovations will propel growth across industries. Crucial accelerators—AI software and services, cloud computing, and robotics—have broad applications and can strengthen sectors in which New York already excels or has leadership potential.

AI software and services

Advances in analytical and generative AI are set to boost productivity across industries, with AI software and services projected to generate $1.5 trillion to $4.6 trillion globally by 2040, growing at 17 to 25 percent annually. However, most economic impact will come from AI adoption rather than direct AI services as businesses integrate AI for tasks such as automation, inventory management, and operations.

New York is fostering AI growth through initiatives such as the Emerging Technology Advisory Board and Empire AI, but private sector investment remains crucial. AI’s influence spans important industries, including professional services, real estate, information, finance, and government. In finance and insurance—New York’s fourth-largest GDP contributor—AI could drive up to 4.7 percent growth, significantly outpacing the sector’s historical 1.4 percent growth rate.

With AI expected to add $340 billion to global banking revenues, New York’s financial institutions must continue adopting AI-driven innovations to remain competitive. Companies such as Blackstone are already investing, allocating $300 million to the AI and data intelligence firm DDN. Media and entertainment could see up to 3.1 percent growth from AI, while pharmaceuticals and medical products could see up to 4.5 percent, reinforcing New York’s strong position in these industries (Exhibit 5).

Cloud

Cloud is a rapidly growing upstream technology, yet only about 20 percent of IT workloads are in the cloud so far. The industry’s growth will depend on the pace of enterprise cloud adoption and rising demand to support emerging technologies’ computational needs. MGI’s research in 2024 found that industry revenues surged from $32 billion in 2017 to $270 billion in 2023, and the industry could generate $3 trillion in EBITDA gains for Forbes Global 2000 companies by digitalizing core operations, accelerating product development, and more. These gains will come from modernizing existing systems; developing new use cases in analytics, Internet of Things, and automation; and leading early cloud adoption. National growth trends underscore cloud computing’s impact on New York’s key sectors. Cloud adoption could boost EBITDA margins by up to 6 percent in finance and insurance, 9 percent in pharmaceuticals—supporting growth in areas such as obesity drugs—and 5 percent in media and entertainment, driving digital advertising, streaming, and gaming expansion. The cloud’s economic potential remains significant (Exhibit 6).

Robotics

Robotics, another potential future arena, is benefiting from a large influx of investment capital that is expected to fuel growth. The entire robotics industry—largely made up of industrial robots, automated guided vehicles, and autonomous mobile robots—generated $21 billion in revenue in 2022 but could grow to $190 billion to $910 billion, depending on the scenario, a CAGR of 13 to 23 percent.

Robotics growth could have a significant impact on New York, partially because the region is home to so many retail and consumer goods companies that are now adopting automation technologies. In a 2022 McKinsey industrial sector survey, 23 percent of retail and consumer goods respondents said they planned to invest more than $500 million in automation (Exhibit 7). Prioritizing robotics will be key to accelerating e-commerce growth, from pick-and-pack operations to delivery. Robotics could also have major effects on life sciences, healthcare, and pharmaceuticals, which account for about 28 percent of US automation investment and are poised to propel growth in areas such as obesity drugs.

Arenas that will improve efficiency and daily lives of New Yorkers

Advancements in this next group of arenas can directly improve the lives of New York’s citizens and consumers, which can also make the region more productive overall.

EVs and autonomous vehicles, along with future air mobility, could reshape urban transit, cut emissions, and lower travel costs but may also disrupt jobs. Modular construction could help ease New York’s housing shortage by reducing apartment costs, though success depends on zoning and regulatory shifts. Our MGI research estimates that in a high scenario these three industries alone could approach $5 trillion in revenue globally by 2040.

To maximize benefits, leaders across all industries should foster broad access and alignment with the region’s policy goals. While these innovations offer significant advantages, careful planning will be needed to prevent them from exacerbating inequalities.

The future of urban mobility in New York

As New York grapples with emissions, congestion, and evolving transit needs, emerging transportation technologies—EVs, SAVs, and future air mobility—could transform urban mobility. These innovations promise efficiency, sustainability, and convenience but also pose infrastructure and significant policy challenges.

Reducing gas-powered vehicles is critical because New York’s roughly two million vehicles contribute significantly to emissions. Today, in the United States, an EV emits less CO₂ on average than a combustion vehicle over its entire life cycle, but widespread adoption requires significant expansion of charging infrastructure. With EV use on track to grow tenfold in five years, the current 160,000 charging ports must scale to at least 12.9 million. And the New York region will need to address power sources and shortfalls in total capacity.

Our research suggests that SAVs, including autonomous taxis and public transit, could capture up to 51 percent of the global shared-mobility market in some communities, offering cost savings and 24/7 availability. However, they may also increase congestion by logging empty miles. Thoughtful regulation will be needed to integrate SAVs without worsening traffic conditions and while addressing workforce disruptions.

Future air mobility—such as electric vertical takeoff and landing aircraft (eVTOLs), supersonic transport, and delivery drones—could redefine urban transit and logistics. eVTOLs may offer premium intracity travel, while delivery drones could revolutionize package and food transport. However, these advances may also disrupt traditional jobs in courier and delivery services.

To fully realize the benefits of these innovations, New York must invest in infrastructure, develop policies to manage congestion, and ensure equitable access while mitigating job displacement. Thoughtful planning will be key to making urban mobility more efficient and sustainable.

Modular construction

Another arena of the future includes modular construction. New York, like other global urban hubs, faces a housing shortage and affordability crisis as rising demand outpaces construction. Modular construction—a form of prefabrication that includes building 2D or 3D modules off-site for on-site assembly—could boost productivity, cutting construction time by 20 to 50 percent and reducing costs when executed correctly. This could help slow the rise in housing costs, increase the speed of new development, and improve overall accessibility.

As the most expensive region in the United States, New York’s housing challenges stem from both high demand and significant supply constraints. While modular construction can help only when projects are approved, it often requires fewer skilled workers and smaller construction areas, addressing labor shortages where 20 open jobs exist for every new hire.

To realize its potential, modular construction needs supportive policies that promote on-site assembly, reliable partnerships with developers and contractors, off-site manufacturing, and efficient transport systems. With these in place in addition to the consistent advance in materials and building technology, a new era of housing development is possible.

The future of New York Starts today

As New York enters a new era of reinvention, it stands at a crossroads—poised to leverage groundbreaking advances that will shape its future for decades. Strengthening its global position in high-growth sectors such as digital advertising, e-commerce, gaming, cybersecurity, and breakthrough drugs for obesity will require strategic investments in technology and workforce development.

To capitalize on opportunities in emerging and disruptive fields such as robotics, AI, and the cloud—industries poised to transform the economy—leaders must prioritize targeted investments, including bold and strategic partnerships.

Innovations in urban efficiency, including modular construction, air mobility, and shared autonomous transportation, demand visionary leadership to reimagine daily life for millions of New Yorkers.

By leveraging its legacy of creativity and investing in technology, infrastructure, and, most important, its workforce, New York can continue to set new global standards for urban reinvention. Embracing innovation, developing talent, and advancing equity will unlock unprecedented economic and social potential. After four centuries of transformation, the future remains New York’s to shape—boldly, equitably, and without limits.

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