Global Forces Affecting Us Economy

Global Forces Affecting Us Economy – , the authors explain the trends that are changing the world and why leaders are adapting to the new reality.

In the Industrial Revolution of the late 18th and early 19th centuries, a new force changed everything. Today our world is going through a more drastic change due to connectivity

Global Forces Affecting Us Economy

Fundamental disruptive forces – any one of them could be among the biggest changes the world economy has ever seen. Compared to the Industrial Revolution, we estimate that the change was ten times faster and 300 times larger, or about 3,000 times more impactful. Although we all know that these disruptions are happening, most of us do not understand the full extent and the secondary and tertiary effects that will result. As the waves grow, these trends gain strength, power and influence as they interact, meet and feed off each other. Together, these four fundamental changes create significant change.

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The first change is to change the location of economic activity in dynamic markets such as China and the cities of those markets. These emerging markets are experiencing simultaneous industrial and urban revolutions, and the center of the global economy is shifting east and south like never before. As of 2000, 95 percent of the Fortune Global 500—the largest global corporations, such as Airbus, IBM, Nestlé, Shell, and the Coca-Cola Company, to name a few—have their headquarters in economic development. By 2025, when China will have more large corporations than the United States or Europe, we expect nearly half of the world’s largest corporations—those with $1 billion or more in revenue—will be headquartered in the marketplace. growing up. . “For years, people in our headquarters, in Frankfurt, started complaining to me, ‘We don’t see you here,'” said Josef Ackermann, former chief executive of Deutsche Bank. “Well, there was a reason. It was: growth moved elsewhere – Asia, Latin America, the Middle East.”

Perhaps equally important, the focus of economic activity is changing in these markets. The global urban population has grown by an average of 65 million people per year over the past three decades, which is equivalent to adding seven Chicagoans per year. Almost half of global GDP growth between 2010 and 2025 will come from 440 cities in emerging markets – 95 percent of small and medium-sized cities the West may not have. hear the map. 1 1. For more, see World Cities: Cities and the Rise of Consumerism, International Institute, June 2012. Yes, Mumbai, Dubai and Shanghai are known. But what about Hsinchu, northern Taiwan? The Brazilian state of Santa Catarina, halfway between Sao Paulo and the Uruguayan border? Or Tianjin, a city 120 kilometers southeast of Beijing? In 2010, we estimated that Tianjin’s GDP was about $130 billion, making it the same as Sweden’s capital Stockholm. By 2025, we estimate that Tianjin’s output will be around $625 billion—almost the size of Sweden.

The second disruptive force is the acceleration in the scale, scope and economic impact of technology. Technology—from the printing press to the steam engine and the Internet—has always been a force for change. The difference today is the scale of technology in our lives and the speed of change. It took more than 50 years after the invention of the telephone until half of American homes had one. It took radio 38 years to attract 50 million listeners. But Facebook attracted 6 million users in its first year and that number increased 100 times over the next five years. The Chinese mobile messaging and texting service WeChat has 300 million users, more than all adults in the United States. Rapid adoption invites rapid innovation. In 2009, two years after the launch of the iPhone, developers made about 150,000 applications. In 2014, this number reached 1.2 million, and users downloaded more than 75 billion applications, more than every ten people on the planet. As fast as innovation has grown and spread in recent years, it is ready to change and grow at a speed that exceeds the expectations of human senses.

Power systems and networks are part of the story. Their impact has been reinforced by the connected data revolution, which is putting unprecedented information in the hands of consumers and businesses, and the rise of technology-enabled business models, from online retail sites like Alibaba to cars. . Thanks to these powerful two sides, more and more people will enjoy a golden age of equipment, fast communication, and seemingly unlimited information. The technology offers economic promise to billions whose economies are growing at a pace that would be unimaginable without mobile internet. Twenty years ago, less than 3% of the world’s population owned a cell phone; Now, two-thirds of the world’s population is one, and one-third of all people can communicate with each other on the Internet. 2 2. Worldwide Smartphone Users Total 1.75 Billion in 2014,” eMarketer, 16 Jan. 2014, emarketer.com; State of Broadband 2012: Achieving Digital Inclusion for All, Broadband Commission September 2012, broadbandcommission.org. The technology allows businesses like WhatsApp to start and scale at incredible speed with minimal capital. Entrepreneurs and startups now often benefit from larger established businesses. The rapid pace of technology adoption and innovation is shortening the life cycle of companies and forcing managers to make decisions and allocate resources quickly.

Chart: Continental Shift: The World’s Biggest Economies Over Time

The population is increasing. Fertility is declining and the world’s population is shrinking. Although aging has been evident in developed economies for some time – Japan and Russia have seen their populations shrink in the past few years – the demographic decline has now spread to China and will soon reach Latin America. For the first time in human history, aging could mean that the planet’s population is outnumbered by most of the world. Thirty years ago, only a small part of the world’s population lived in some countries with very low fertility rates that needed to be replaced every generation – 2.1 children per woman. But as of 2013, nearly 60 percent of the world’s population lived in countries with fertility rates below the replacement rate. This is a sea change. The European Commission expects that by 2060, Germany’s population will decrease by a fifth, and the number of people of working age will decrease from 54 million in 2010 to 36 million in 2060, a level lower than that of France. China’s military peaked in 2012, driven by income-based demographic changes. In Thailand, the fertility rate has fallen from 5 in the 1970s to 1.4 today. A small labor force puts a huge burden on the productivity of growth and makes us rethink the power of the economy. Caring for a large number of elderly people is putting a lot of pressure on government finances.

The final disruptive force is the rate at which the world is increasingly connected to business and the movement of capital, people, and information (data and communications) that we call “flows.” Business and finance have long been a part of international history, but in recent decades there has been a major shift. Instead of a series of lines connecting the major trading centers of Europe and North America, the world trade system has expanded into a complex, complex and vast internet. Asia is becoming the largest trading region in the world. “South-South” flows between emerging markets have doubled their share of world trade over the past decade. The volume of trade between China and Africa increased from 9 billion dollars in 2000 to 211 billion dollars in 2012. World capital increased 25 times between 1980 and 2007. More than one billion people crossed the border in 2009, five times more than in 1980. The three types of correlations all stalled during the global recession of 2008 and have slowly recovered since then. But technological connectivity has developed at an ever-increasing pace, bringing a new dynamic to the world, creating unprecedented opportunities, and creating unexpected instability.

These four challenges quickly accumulated, grew in scale, and together began to have a material impact on the world economy at the beginning of the 21st century. Today, they are disrupting long-standing patterns in every market and every sector of the world economy – in fact, every aspect of our lives. Everywhere we look, these trends seem to break, break, or break. The fact that all four are happening at the same time means that our world has fundamentally changed from the one in which many of us were born, developed, and developed critical thinking for decision-making. .

It can spoil the predictions and preliminary plans made only by removing the immediate experiences in the near and long term. Many of them were assumptions, trends and traditions

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