October 11, 2021 /8.00PM / Iyioluwabomi Onakoya, Proshare research
intern/Header Image Credit: BBC Science Focus Magazine
The next decade is shaping an era of technological and intellectual innovation closely resembling the world of science fiction. The future of the global economy will be shaped by the 5th industrial revolution (5IR), technological advancements, the evolution of money, demographic changes, and the green revolution (see illustration 1 below).
Illustration 1: Likely trends shaping the future of the global economy
The future of work is bleak for up to 375 million people worldwide who are susceptible to being displaced through the automation of routine processes (according to Mckinsey Global Institute). Research by the Bank of America collaborates their findings, citing that about 50% of tasks will be fully automated by 2035. Little wonder why many organisations and governments have been investing heavily in research and development (R&D).
Renewed pressure on companies to swiftly deliver high-quality products to customers has placed them between a rock and a hard place. Thus, robotics and automation can achieve a faster and more cost-effective production process. Within the next ten years, repetitive tasks in retail, healthcare, construction, education, manufacturing, financial services, accounting, amongst others, are susceptible to being automated, rendering some workers redundant. Nowadays, most companies have both human and automated machinery to handle customer support.
Additionally, the diverse applications of blockchain technology will revolutionize business processes in 2030. For instance, smart contracts can help to reduce costs, securely encrypt important data, and simplify processes in banking and insurance, healthcare,etc.
Possible use cases of smart contracts:
More recently, the demand for Non-fungible tokens (NFTs) has shot through the roof as people exploit the technology as an alternative means of income. The possible applications of NFTs cuts across the digital art world, gaming, finance, real estate, amongst others. According to data from market tracker DappRadar, NFT sales volume rose astronomically Q-o-Q to $10.7 bn in Q3 2021 from $1.3 bn.
Technological advancement is incomplete without discussing the possibility of future generations of cellular technology. Ambitious tech companies and advanced countries -like South Korea, China, Apple- have already begun research and development initiatives for a possible 6G network. The new network would be 100 times faster than 5G with holographic technology capacity (see illustration 2 below).
Illustration 2: Major technology trends, from Here to There
Evolution of money
Digital currencies and cryptocurrencies are steering the world closer to a cashless economy. Recently, the IMF highlighted the potential of crypto assets to foster faster and cheaper cross-border payments as total market value has grown by 10-folds ($2tn) since 2020. The international body also stated that crypto adoption could foster lower transaction costs and higher returns. According to data from Chain analysis Q2 2021 Global crypto adoption index, the crypto market has garnered attention in emerging markets as a means for households to hedge against currency devaluation. Meanwhile, institutional investors largely account for crypto adoption in North America, Western Europe, and Eastern Asia Y-o-Y.
The IMF advised countries on the looming threat to global financial stability caused by the 2021 crypto boom. The 'cryptoization' of local economies and soaring capital outflows are part of such notice. Thus, it recommended the following
As of July 2021, about 81 countries were exploring the prospect of issuing CBDCs. The popularity of CBDCs will facilitate affordable real-time cross-border transactions, tax collection, and fraud reduction. However, some analysts doubt the ability of CBDCs to deliver on some of its objectives, such as financial inclusion
Unfortunately, advancements in quantum computing technology provide black-hat hackers with the opportunity to decode complex crypto wallet passwords easily. Thus, data privacy and security will be crucial to surviving in tomorrow's world.
The 5th industrial revolution (5IR)
Alternatively known as Industry 5.0 or 5IR, it emphasizes the role of human intelligence, innovation, inclusivity, and diversity in the workplace. The objective is to use the advanced technologies from the previous stage (4IR) to automate repetitive work while people control strategic and creative tasks. The central theme of the 5IR is the shift to mass customization and personalization of goods and services as machines augment human capital, not replace it. AI will shift the learning style to a highly personalized learning process that merges theory with application in terms of education.
Although millions of manufacturing jobs will be lost to robots, novel job opportunities related to designing AI algorithms, supervising robots in the workplace, etc. will be in high demand (see chart 3 below)
Illustration 3: Main trends underpinning Industry 5.0
The Green Revolution
Building a sustainable ecosystem has increasingly been the focal point of many international organizations, thereby influencing companies and countries to consider the effect of business decisions on the environment. The United Nation's (UNs) Sustainable development goals (SDGs), launched in 2015, were established to serve as a blueprint for building a better future. As the deadline draws near, many are questioning the capacity of countries to fulfill the global goals by 2030.
There will be a continued shift from petrol and diesel cars to electric vehicles (EVs) in the next ten years, particularly in advanced countries. Some of the world's biggest carmakers already have plans to sell mainly EVs by 2030. Similarly, renewable energy will become more widespread as countries strive to prevent many possible environmental issues.
In ten years, the global population will be characterized by declining birth rates and an ageing populace. This denotes that there might be a restructuring labour force to accommodate more members of the people. This would open up new employment opportunities as businesses venture into producing goods and services for the majority. Recent scientific exploration in age reversal, cryonic experiments, etc., reflects the growing interest in immortality. The possibility of extending the average human's lifespan in good health implies the potential for age to be nothing but a number.
Currently, the typical characteristics of Generation Z have influenced business decision-making processes as companies need to take note of their limited brand loyalty, need for swift service, and familiarity with technological appliances. Consequently, companies will need to restructure their business plans to cater to Generation Alpha. Generation Alpha will have a shorter attention span and concentration level; they will be hyperconnected, digitally savvy creatives that strive for inclusivity and diversity.
UN estimates reveal that Africa will be home to a buzzing youthful population in the next ten years. Thus, it can become a tech hub gainfully employing millions to reposition it amongst the world powers.
Predictions for the global economy-A Bite at the future
Here we will briefly highlight the possible economic, environmental, political, and social consequences of these trends.
Illustration 4: Predictions for the Global Economy
Terrorism will likely expand beyond physical violence to include cyber and bioterrorism. The growth of cyber terrorism is alarming as criminals will continue using the internet to incite violence, recruit members, access financial support, e.t.c. Unsurprisingly, the predicted loss from cybercrime is expected to rise to US$10trn annually by 2025.
The technological revolution has heightened the risk of bioterrorism. It is a difficult to predict but high consequence risk that should not be tossed aside. Many problems seem impossible and unrealistic until they become a reality, for instance, the transnational effect of Covid-19. The argues that by 2030, chemical and biological weapons are likely to be more accessible to state and non-state actors and highly untraceable. Thus, terrorism has the potential to become a sophisticated global enterprise armed with an arsenal that ignorant countries cannot but dream of.
Moreover, the income inequality gap may become more extreme and divisive. Technological experiments that provide the option of immortality will likely be available for just the elite. Thus, we may have a society where the rich never dies while the poor keep slaving away for that big break. Consequently, more people will direct their attention to crime as an attractive means of income, thereby killing the economy from the inside. This plausible scenario speaks to the importance of economically productive human capacity.
According to demographic changes estimated by the UN, the rising threat of labour force shortages will affect both advanced and developing countries. This does not equate to full employment levels across countries because millions will be displaced through automation and AI. Thus, companies will mainly demand highly skilled workers who will likely work on contractual basis-Gig workers. The shift to a gig economy will gain popularity as gig workers may shortly comprise up to 50% of the global workforce.
Also, the growing pressure on food may lead to famine, according to the UN. OECD also corroborates this risk as it predicted that the demand for food is expected to surge by at least +35% by 2030. However, technological advancements on laboratory-engineered meat and chicken is a plausible solution to fulfilling the UN's Zero hunger SDG.
On the social front
For the employee of tomorrow, imagination and innovation will always take pre-eminence. Workers will need to develop technical and soft skills to survive in the highly competitive job market. Workers will need to prove their ability to apply technological innovations of the 4th industrial revolution (4IR) to various sectors of the economy. Thus, employees will compulsorily need to develop relationships with clients.
Furthermore, non-traditional households will become the norm due to the inclusivity and diversity trends of the 5IR. According to the organization for economic cooperation and development (OECD), the change in family structure in 2030 will be influenced by demographic changes, society and societal trends, technology, and economic outlook. So, other family forms like single parenthood, same-sex unions, polygamy, robosexuality, e.t.c. will form a new model of family life.
Emotional intelligence (EI) will need to play a core part in the curriculum. As the metaverse slowly becomes a reality, the need for face-to-face interaction will decelerate. A high EI is critical to reducing cyberbullying and peer pressure.
Saving the Environment
Sustainability needs to be the motto to live in a green world by 2030. The 2021 SDG progress report stated that 129 countries are not on track to ensure sustainably managed water resources by 2030. The looming threat of climate change can lead to disastrous changes in rainfall patterns and cause excessive heat and erosion. This will negatively affect the agricultural sector by reducing harvest and causing food shortages.
In terms of renewable energy, countries worldwide will need to ensure that renewable energy is used in the heating, transport, and electricity sectors. Developing countries need to explore the vast untapped potential for renewable energy by investing in R&D. For instance, Indonesia is in the process of using palm oil as an alternative to crude oil.
Consequently, green technology will be crucial to reducing greenhouse gas emissions to attain a maximum of 2oc by 2030; to achieve this, annual emissions need to decline by 2.7% yearly. According to the UN, this goal is still achievable because of increased awareness of sustainability benefits and ambitious efforts made by different economic agents.
Politics; the Tyranny of Self
Authoritarianism may revive if old wealthy leaders have access to age-reversal and immortality-driven experiments. Consequently, we may expect that monarchies and authoritarian leaders to drag on forever if the cycle of life and death is interrupted. The consequence could be another nail in the coffin of the dream of democracy in some countries if death cannot claim brutal authoritarian rulers.
Global governance would be affected by the ageing population. State resources will be heightened pressure as pension costs grow exponentially due to a longer life span.
Eye on the Future
Forecasts by Dell Technologies and the Institute for the Future revealed that 85% of possible jobs opportunities in 2030 are yet to exist. Although automation and artificial intelligence (AI) would make some jobs redundant, there is a vast gulf of unexplored possibilities for the workforce of 2030. Organizations need to ensure that their business plans can stand up to what the future offers, even if it is another pandemic.
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