Visions for the Future – Geo-visions
Long-term projections and the various scenarios have always provided important aspects for understanding the processes of the world’s future change. That is why the Economist Intelligence Unit (EIU) devised a methodology that a empts to produce a longterm economic forecast for 82 countries, thereby lending insight into the key developments that are expected to in uence and determine the functioning of the business world until 2050.
The top 10 Economies of the World in 2050
China is expected to overtake the US by 2026, and become the leading major economy by 2050. With an average growth of 5% until 2050, India is projected to rise to the third place, while Indonesia and Mexico will join the top 10 economies of the world. 73 Western economies are not expected to feature prominently in the top 10. The US, Germany, the UK and France will be ranked lower, and Italy will not be among the world’s ten most powerful economies.
The Rise of Asian Countries
“The rise of Asia”, as a phenomenon, is not a novelty, as we have already witnessed the economic ascent of Japan and South Korea in the second half of the 20th century. In the early 2000s we saw another boom, when the Asian economy increased its share from the world’s GDP from 26% to 32% between 2000 and 2014. According to the EIU’s report, Asia’s growth rate may change but growth will continue, and Asia’s nal share of the world’s GDP is projected to expand to 53% .
Source: The Economist Intelligence Unit, The Economist, http://pages.eiu.com/rs/783-XMC-194/ images/Long-termMacroeconomicForecasts_KeyTrends.pdf
The Dominance of the World’s Top 3 Economies
By 2030, the world’s top 3 economies will be the US, China and India. By 2050, each of these three countries will be richer than the five countries ranked after them (Indonesia, Germany, Japan, Brazil and the UK) com- bined. Furthermore, due to their economic clout, China and India will play a much greater role in shaping global issues (e.g. climate change, interna- tional security, global economic governance). Over the medium term, the dominant global power – or the US – has to let India and especially China enjoy an ever larger role and in uence in international institutions.
The New Era of Demographic Decline
Based on the average of historical periods, no drastic global demographic decline is expected until 2050, however, we will experience shrinking at all regional levels from 2030. Long-term demographic projections show that the average fall of 1.3% in 1980–2014 will be reduced to 0.5% in 2015–2050. The growth rate of the world’s working age population will decrease from 1.7% in 1980–2014 to 0.3% in 2015–2050.
Population Growth Will Still Bene t Some Countries
Africa and most countries from the Middle East will pro t from the expansion of the working age population, which will be an enormous advantage for them in the coming period in making their growth sustainable. The potential labor force of Nigeria, Angola and Kenya is expected to almost triple between 2014 and 2050. 74 In Algeria, Egypt and Iran, a similarly substantial growth is projected until 2050. The countries that utilize the favorable demographic trends and take a growth-friendly course, will be successful in providing jobs to the expanding labor force, therefore they may achieve long-term growth. But in the countries that are unable to employ the growing labor force, the demographic boom may cause political instability.
Population as a Source of Growth Has to Be Replaced
In most European and East Asian countries, growth will decelerate due to the shrinking labor force. The drop in the working age population will be the greatest in Japan at more than 25%, i.e. a decline from 66 million to 47 million. In China and South Korea, the labor force is expected to contract by 17–18%. In Europe, the share of the working age population is projected to fall by 20% in Greece, Portugal and Germany.75 The group of European emerging (developing) countries (including Kazakhstan and Turkey) is also expected to experience decline, ranging between 20% and 30%.
Collective Af uence, Individual Poverty
Growth is forecast to be greater in developing countries than in developed countries, therefore China and India, two countries that will become advanced economies, will surpass the current leaders, i.e. the US, Japan and Western Eu- rope. Furthermore, other developing countries such as Indonesia and Mexico will join the leading economies of the world, overtaking countries like Italy or Russia. In contrast, per capita income, which measures the purchasing power of the individual, will remain the highest in developed countries. The World in 2030 – 7 Trends for the Decades Ahead History has not ended, although many have claimed that social and tech- nological progress have achieved everything that they were destined for. In its 2014 study (Trend Compendium 2030), the Roland Berger Institute examined what the key trends will be in 2030.
Demographics: Increasing Urbanization and Aging Population
Since 1990, the population of the earth has expanded from 5.3 billion to 7 billion, and according to estimates, by 2030 nearly 8.3 billion people will live on the planet. However, the growth rate of the population will somewhat decelerate, however, the di erence between the growth rate of developing and developed countries will be even larger. Developing countries will grow seven times more rapidly than advanced economies, therefore the balance of the population will be tipped even more toward developing countries; in 20 years, 85% of the popula- tion will live in developing countries. In parallel with increasing life expectancy, the median age of the population will steadily grow. This gure will rise from 29 to 34 by 2030. It is worth noting that in the 20 years between 1990 and 2010, this increase was a mere 4.7 years, i.e. the median is clearly increasing at an accelerat- ing pace. By 2030, the median age of the population of developed countries will be 12 years higher than in developing economies. The ever growing generation of those aged over 60 has to be included in social and economic processes. Due to constantly intensifying urbanization, by 2030, 59% of the population will live in cities, whereas in 1990 this gure was 43%. The overwhelming majority of the increase will happen in developing countries. Cities have to be regarded as large “trend laboratories” where new solutions are born.
When analyzing technological progress and the potential in the various regions, we can draw interesting conclusions from the developments in the number of mobile Internet users and their territorial distribution. While in 2010, 1% of the population had access to the Internet, by 2030 this gure will rise to 60%, nearly 5 billion people, with the greatest increase in Asia. The basic innovation periods follow each other in Kondratiev waves. The cycle between 1990 and 2010 was the age of the progress of information and communication technology, while the 20 years between 2010 and 2030 will be the era of life sciences. Within life sciences, biotechnology, medicine and the pharmaceutical industry will show the most dynamic growth. With the aging of the population, the demand for medicines will steadily grow, as the old consume three time as many medicines as younger age groups. The fact that due to intensifying urbanization and global mobility diseases spread more rapidly poses a further challenge.