The Emerging Tri-Polar World Economy

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The Emerging Tri-Polar World Economy

Consider the big picture, as we’ve laid it out in previous issues of Trends:

  • The population of the developed world is rapidly aging.
  • The United States is the only advanced nation where the workforce is forecasted to grow over the next 50 years.
  • The populations of the EU and Japan are actually expected to shrink over that time period.
  • Even China is rapidly aging and the size of its workforce will peak around 2025.
  • At the same time, Latin America, India, the Middle East, and Africa all have young, rapidly growing populations of under-utilized workers and under-served consumers.

To put it succinctly, in the 21stcentury, the world faces a population implosion in developed nations, while over-population continues to be the norm in most developing countries. Looking ahead to mid-century, the developed nations will have very high median ages, enormous health care burdens, and an unsustainably high ratio of retirees to workers.

At the same time, developing countries will have large, young populations with few economic opportunities. These impoverished billions will be increasingly crowded into a few Third World cities surrounded by poverty and disease. Meanwhile, the slow-growth domestic economies of the EU, Japan and North America will not be able to fund the lifestyles demanded by their aging citizens.

In both settings, a mismatch of a population and its economic environment will give rise to a host of social and political problems. The unemployed, under-employed and disaffected youth of the developing world will represent a huge destabilizing force, with a continued rise in crime, terrorism, and a general sense of despair. At the same time, we’ll see a collapse of the European social safety net, as well as disappointed retirees in the U.S. and Japan.

But, as Professors Jagdish Sheth and Rajendra Sisodia observe in their new book, Tectonic Shift,1 “There is one sure way for this bleak picture to be brightened and for hope to take wing. That is for the developed world and the developing world to recognize how desperately they need each other and the extent to which the solutions to their problems lie in embracing each other.” Instead of trying to grow by trading among themselves, the most advanced countries will grow much more quickly by trading with the big emerging nations.

Recognizing this, the world is already becoming realigned along a north-to-south axis, and it is in this realignment that we see the beginnings of an alliance between the developed and developing worlds...

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