Megatrends transforming our world

The world of 2030 will be radically transformed from our world today, says the December 2012 report, Global Trends 2030: Alternative Worlds, published by the US National Intelligence Council. The report identifies four megatrends that will shape our world out to 2030. These trends are underpinned by tectonic shifts that will transform our world today.

Megatrend 1: Individual empowerment

Individual empowerment will accelerate substantially during the next 15-20 years owing to poverty reduction and a huge growth of the global middle class, greater educational attainment, and better healthcare. This is the most important megatrend because it is both a cause and effect of most other trends – including the expanding global economy, rapid growth of developing countries, and widespread exploitation of new communications and manufacturing technologies.

The growth of the global middle class constitutes a tectonic shift. For the first time, a majority of the world’s population will not be impoverished, and the middle classes will be the most important social and economic sector in the vast majority of countries around the world.

Megatrend 2: Diffusion of power

The diffusion of power among countries will have a most dramatic impact by 2030. Asia will have surpassed North America and Europe combined in terms of global power – based upon GDP, population size, military spending and technological investment. China alone will probably have the largest economy, surpassing that of the US by 2030.

In a tectonic shift, the health of the global economy increasingly will be linked to how well the developing world does – more so than the traditional West. The shift in national power may be overshadowed by an even more fundamental shift in the nature of power. Enabled by communications technologies, power will shift toward multifaceted and amorphous networks that will form to influence state and global actions. To be effective, even countries with the strongest fundamentals will have to learn to operate in networks and coalitions, including with non-state actors, in a multipolar world.

Megatrend 3: Demographic patterns

By 2030, the world’s population will be around 8.3 billion, up from 7.1 billion in 2012. Certain key demographic trends will fundamentally shape most countries’ economic and political conditions as well as relations among countries. These trends are: ageing populations, growing urbanization, and global migration. These are trends that I have addressed in some earlier articles.

Ageing is a tectonic shift for both the West and increasingly most developing countries. Ageing countries will face an uphill battle to maintain their living standards. Due to shrinking labor force in ageing societies, demand for both skilled and unskilled labor will expand, spurring mass migration, which will become increasingly a cross border issue. Growing urbanization is another tectonic shift – for the first time in human history, there will be more people living in urban than rural areas. This will spur economic growth but could put new strains on food and water as well as other resources. For example, owing to the rapid urbanization in the developing world, the volume of urban construction for housing, office space and transport services over the next 40 years could roughly equal the entire volume of such construction to-date in world history.

Megatrend 4: Growing food, water and energy nexus

Demand for food, water and energy will grow by approximately 35, 40 and 50 per cent respectively between now and 2030 as a result of an increase in global population and the consumption patterns of an expanding middle class. Climate change will worsen the outlook for the availability of these critical commodities in many countries, including those in the Middle East and parts of Africa.  Tackling problems pertaining to one commodity won’t be possible without affecting supply and demand for the other two. For example, agriculture is highly dependent on accessibility to adequate sources of water as well as on energy-rich fertilizers.

In another tectonic shift, the US would likely become energy independent and perhaps even an exporter of energy. Due to hydraulic fracturing technologies, the US has regained its position as the world’s largest natural gas producer and expanded the life of its reserves from 30 to 100 years. Addition crude oil production through “fracking” drilling technologies on difficult-to-reach oil deposits could result in a big reduction in US net trade balance and improved overall economic growth.

We can embrace change or get left behind

keynesThe megatrends and the related tectonic shifts described above will create massive transformations to the world that we live in today. Most of us don’t like such drastic changes – in fact we find it difficult to even accept the idea. As the great economist John Maynard Keynes succinctly put it in 1937: “the idea of the future being different from the present is so repugnant to our conventional modes of thought and behavior that we, most of us, offer a great resistance to acting on it in practice”. But these megatrends are already here – they are not vague predictions. So either we adapt and embrace the coming changes or we get left behind. That is the choice we have.

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