I had the pleasure of hearing a talk by Erik Peterson of the Center for Strategic and International Studies. If you ever have the opportunity to hear him speak, by all means take advantage of it. His talk was on the world as his organization sees it in 2025. It is called Seven Futures (this web link as a great deal of detail on his analysis and presentation). The seven futures refers to the seven parts of the world outside of North America. Even if you are running a small business in the middle of Kansas, the world economy is, and increasingly will be, having an impact on your business.
A quick summary of the world in 2025 and beyond:
- The world is not positioning itself well for the growing entrepreneurial economy. Regulation, property rights and instability are all great concerns.
- Brazil, Russia, Indian, and China are key countries to follow (in addition to the US)
- By 2025 the developing world will account for over 50% of the total economic output
- Latin America does not have a good long-term outlook, due to over-regulation, governance "fatigue", and political alienation. Although becoming a major force, Brazil will most likely fall short of its potential to become a world economic power.
- Europe will never see true integration via the EU (which in my opinion is a good thing). Social welfare systems will be pushed to the brink with falling worker to retiree ratios. Although immigration may be necessary to sustain the workforce, anti-immigration attitudes are growing.
- Middle East and Africa has a rather worrisome mix of rapid population growth, modest economic growth, political instability and conflict, all mixed together with religious extremism.
- Sub-Saharan Africa has a long term AIDS crisis and increasing undernourishment. The glimmer of hope lies in untapped fossil fuels to boost the economy if they can be properly managed and governed.
- Russia and Eurasia has a weak economy with a population that could decline by a third by 2050. Aging population and health crises from environmental disasters put further strain on this region. Governance is key with massive reform, but the outlook of this seems bleak.
- South Asia has the potential to be an economic powerhouse, especially India. India is on track to be the most populous country by 2050. The relationship (or lack there of) between India and Pakistan is the only wild card.
- East Asia is the other potential economic dynamo, but interestingly China has only about a twenty year window to get it right. Their one-child policy is going to lead to a rapidly aging population with a dramatic shortage of females in China. Economic liberalization is unlikely.
