International Economics and Wealth
Annotated Scenarios Bibliography excerpt from 2010 State of the Future report
The Future of International Migration to OECD Countries. Five 2030 scenarios explore forces that may attract migrants to OECD countries or persuade them to stay at home. OECD International Futures Program (IFP), published on the responsibility of the Secretary-General for the Organization for Economic Co-operation and Development (OECD). 2010/PDF/285pps/www.oecd.org. Over the next several decades, migration from developing countries to OECD countries will largely increase, due to the influences of technological, demographic, economic, environmental, political, and the labor markets. This report explores the complexities of immigration through a 15 month workshop series on the future of international migration through 2030. The work includes a broad over view of influences (“push and pull factors”) and likely developments in developing countries, with five different future scenarios developed with the help of foresight experts. Overall driving forces of immigration patterns show that worldwide, migration flows will, like the trend over the past 30 years, continue to rise. In non-OECD countries, the environment (climate change) is increasingly becoming a factor, among other economic, demographic, and social pressures to “pull” migration into OECD countries. As populations age in OECD countries, there will be growth in certain sectors demanding migration from non-OECD countries, such as an intensifying global competition for top talent, the world becoming increasingly multi-polar, which will intensify political instability in the future. There are nine key patterns (drivers) of change which the IFP Group believes will have a strong bearing on how the scenarios will play out: 1) Demographic shifts (described in detail in the report); 2) changing economic landscape; 3) political complexity; 4) expanding business agenda; 5) science led innovation; 6) growth of an ageing society; 7) talent shortages; 8) global internet expansion; and 9) rising environmental risks. Each scenario includes an in-depth report on political, social, and demographic implications to 2030. After the scenarios, the report concludes with implications for the following source regions: South Asia, China and South East Asia, Africa, the Middle East, Latin America and the Caribbean, and the Russian Federation and Central, Eastern and South-East Europe. [The following is an excerpt from the report:]
Scenario 1) “Progress for all” By 2030, the benefits of increased global economic integration and growth are benefitting most nations – even the Less Developed Countries (LDCs). There is strong integration of the global economy, a relatively benign political context and worldwide progress on tackling environmental risks. The EU has enlarged and strengthened as an institution. Strong regional institutions have also emerged in Asia, Africa, the Gulf States and Latin America. Institutional strength has helped to strengthen regional economies, enhance international trade and establish global agreements on the mobility of workers. The ageing of OECD populations, high economic growth and skill shortages across most sectors are key drivers of demand for inward migration. The emergence of regional growth poles encourages increased intra regional migration. The continued globalization of corporations from both the developed and developing world has helped increased the competition for both skilled and unskilled labor in OECD and non-OECD countries. There is a strong circular flow – particularly of professionals and skilled labor between the OECD, BRICs and other developing nations. The attractions of migration are being countered by the increasing range of opportunities in people’s home countries – although the wealth and income gap with the OECD and BRICs remains high. A key feature of the scenario is international co-operation which helps drive globalization, accelerates global trade for most regions and increases the flow of aid from OECD and BRIC countries to other emerging nations and LDCs. Although, the outlook for emerging nations and LDCs improves over the period to 2030, we are unlikely to see a change of “push” factors over the first 10 years.
Scenario 2) OECD “Long Boom” This scenario to 2030 presents a view of perpetuation of a 20th century development model where richer countries continue to prosper while developing countries struggle to fulfill their potential. While the OECD countries have been fuelled to new levels of economic prosperity on the back of high investment in technological innovation, the BRIC countries have failed to maintain their stellar growth rates o the late 1990s and early 2000s. Internal barriers such as under-investment have held back BRIC progress, while other developing nations have been pulled along in the slipstream of OECD growth. Institutions such as the EU and OECD have grown and strengthened whilst across the developing world other regional groupings have failed to act as a coherent driver for growth and progress. The demand for in-migration remains high in the OECD, but there is less intense competition from the BRICs.
Scenario 3) Uneven Progress The OECD countries and BRICs make strong progress and achieve close economic and trade integration. The gap increases with many other developing countries and LDCs who cannot to afford to invest as much in technological innovation, infrastructure, education and health. While there is strong competition for talent between OECD and BRIC nations, there is also a growing supply of skilled and unskilled would-be migrants. The EU has proved an effective driver of growth and in Asia, the ASEAN and Gulf Cooperation Council regional groupings are becoming a coherent economic force. However, the progress of similar groupings in Africa and Latin America continue to falter. There are expected to be increased tensions between cores and peripheries and urban rural areas in developing nations that struggle to achieve advancement. Many of these states show a decreased ability to cope with environmental degradation, water shortages and food stress. All of these factors help drive outward migration. The tension inherent in the wildcard situations is heightened in this scenario such as the potential for more pandemics in countries with limited funding available to implement effective controls. However, this might be mitigated by technological advancements such as health sector discoveries that produce low cost multiple disease vaccinations and low cost solutions that help the energy sector to moderate demand for oil. This scenario could see a rise in reverse migration trends to BRIC economies and migration may even decrease for some OECD countries.
Scenario 4) Globalization Falters Regular global economic downturns act to depress globalization, growth, infrastructure investment and social development across the world. The EU has either disbanded or become far less effective as an entity. Across the world regional groupings have been considered a lower priority than individual nations’ domestic interests. Whilst the demographic drivers in the OECD mean there is still demand for in-migration in key sectors such as elderly care, the potential supply far exceeds demand. OECD nations in particular use a range of policy instruments to prevent unmanageable in-migration. A growth in illegal migrants would be expected. Pressure for migration increases in a global environment stymied by lower growth, scarcity of critical resources, declining living standards and lower productivity. These pressures would exist in a policy environment hostile to international co-operation, leading to tighter border policies to control migrationary pressures. Legal and clandestine migration may also be checked by an increase in the cost of migration.
Scenario 5) Decoupled Destinies The much heralded “decoupling” of developed and developing economies is starting to take place. The OECD countries are beset by a series of increasingly severe and ever more expensive downturns, from which it becomes harder and harder to recover. The credit crisis and resulting downturn of 2008-2012 led to a massive flight of global capital to developing economies and LDCs. These inflows enable developing economies to focus on longer term investment in critical infrastructure, education, healthcare and technological diffusion and have helped provide a massive growth stimulus to many nations. Tensions in the EU mean that it has either weakened or broken up into smaller more local groupings – such as the Scandinavian bloc. In contrast, regional groupings for Asia, Africa, the Gulf States and Latin America have all made considerable progress and have become effective co-coordinators of policy and drivers of growth. Collaboration between these groupings is increasing and frequently by-passes the EU, UN and other “old world” institutions. Economic and social development, coupled with increasing trade amongst developing nations and LDCs have provided new cause for optimism and stimulated reforms in governance and key institutions. Whilst there are limited opportunities for skilled migrants in the OECD, there is now an array of choice for skilled and unskilled labor in both their own countries and across the developing world and LDCs. A virtuous circle develops with greater co-operation, aid and technology transfer flowing between the developing and poorest nations, helping to pull even the weakest states to higher levels of growth and progress. Investment in education, greater female participation in the workplace, higher investment in research and development and increased innovation all spur job creation and create the conditions in which fertility rates can come down. At the same time, in many countries, increased growth provides the funding for investment in clean water, sanitation, pollution control and coastal protection – all of which serve to reduce migrationary pressure. Overall these factors help to reduce the demand for out-migration and encourage in-migration to developing economies and LDCs. At the same time, firms from the developed world will be increasing their investment in developing markets – further driving the demand for skills and accelerating the inflow of foreign expertise that could help drive technology diffusion, innovation, job creation and wealth generation.
The Day Google Died. Thomas Frey, senior futurist with the Davinci Institute, Louiseville, Colorodo. February 22, 2010/Blog/www.davinciinstitute.com. Recent announcements this year from Google about massive attacks by Chinese hackers and stories about cyber criminals hijacking over 75,000 computers in one large-scale attack indicate security challenges about our data’s future. Many corporations – major ‘information’ corporations - are at risk of being hacked and destroyed. Security involving government systems are “exponentially slower” than the businesses that use them. “They are ill-prepared for the disruptive forces and sweeping pace of new intrusive technologies.” According to Thomas Frey, the vast majority of “humanity’s data” lies in the hands of individual corporations. Companies like Google, Amazon, Yahoo, Apple, IBM, and Microsoft have staked their future on the value of the information being collected and archived in their datacenters. They have created the systems for collecting it, and have invested heavily in vast server farms for storing it. “Cloud computing,” a catch-term that defines the storing of information on servers located a substantial distance away from client companies, is becoming more commonplace. Information about information in the future will dwarf the size of the original data. Trillions of documents will begin to multiply exponentially. In the future, the cost of information storage and transmission will be an issue. “Currently, the cost of powering data centers will reach $40 billion annually by 2012 (IDC). By 2020, super intelligence communication systems will make information extraordinarily pervasive and intrusive. The challenges are huge. In this very short scenario, Frey dramatizes what could happen to Google, an essential service to millions of computer users worldwide. [The following is an excerpt from the article:]
Scenario: The Day Google Died. It was a frenzy of activity as workers scurried from office to office, making their final checks, gathering books, papers, and personal belongings. Many were still stunned over the announcement that Google was closing its doors. The final minutes before the deadline were reserved for tearful hugs and remorseful goodbyes, but for the people of the world these brief moments of stunned silence would soon be replaced with long term anger and outrage…A mere three weeks earlier this one-time tiny search engine company that overnight had grown into a goliath on Wall Street had appeared to be an invincible force on the global business stage. But now after wave upon wave of well-orchestrated attacks, the giant corporation had fallen to its knees, and in true medieval form, endured the equivalent of a public beheading of its data, its once stellar revenue streams, and its corporate integrity…Teams of their best data-smiths and strategy people worked around the clock to plug the holes in their sinking ship, but were woefully unprepared for this kind of assault. After weeks of sleepless nights, witnessing one crippling blow after another, a grim new reality began to take hold. In the end, all data had become mangled to the point where it was irretrievable, and all backup systems suffering a similar fate…TV cameras from around the world watched in horror as a single hand reached up and turned off the final power switch…With the power turned off, an eerie silence filled the room…The former giant of global business had breathed its last breath. This was the day that Google died.
Growth Scenarios: Tools to Resolve Leaders’ Denial and Paralysis. Jonathan Starr, Global Business Network and Doug Randall, Global Business Network. Strategy & Leadership Journal, Vol. 35. No 2. 2007/Emerald Publishing/PDF/www.emeraldinsight.com. To survive in today’s economy, business in the hi-tech industry can only survive through innovation and the ‘creative destruction’ of business-as-usual models, which, for many in management, can lead to uncertainty, apprehension, and “paralysis.” There is fear about the unfolding of the business environment, and business leaders are also fearful they will misperceive changes in the marketplace. Some companies opt for “denial”: let us continue business-as-usual as long as ‘I’m OK, Your OK.’ In this article, Jonathan Starr and Doug Randall discuss the approach of one hi-tech company that asks the authors to help investigate new sources of growth in the industry. The key quesiton for them was, on an HR level, can they anticipate the potential skills and capabilities that would be required of it's engineers? The challenge was to create a set of scenarios that allowed the management team to recognize their own of paralysis/denial, and to better perceive new ways the business could evolve in the future. Three scenarios were created - each looking back from ten years in the future (back casting) – which told very different stories of how and why the business had changed and thrived in the intervening decade. [The following is an excerpt from the article:]
Scenario 1) The Big Top In this scenario, the business unit has invested heavily - and successfully - in a small number of big "plays" where their technology is used in large scale healthcare and entertainment applications. As a future CEO explains: We pushed our ideas and resources into a very small number of new market directions, particularly those where we could protect our intellectual property. In many ways, this was a repeat of the model that had served them so well with an earlier generation of technologies. When the client developed this scenario, the team realized how much the viability of this "big play" approach depended on greater company-wide collaboration and integration with the organization's broader strategy. This was not about perfecting a massive stand-alone product, but about placing the business unit at the center of an ecosystem. Consequently, the business unit would have to think as much about the ecosystem architecture as about the technology.
Scenario 2) The Diverse Incubator In this scenario, the business unit becomes a powerful innovation center, an incubator of many, diverse, successful businesses. The future CEO lauds the shift from a staid corporate facility to a dynamic hotbed of energy and ideas. "We are most proud of the fact that we made this change with the staff we had. We didn't have to change the people - we couldn't find better talent anywhere - but we did have to shift the mindset and distinguish carefully between the core business and the sundry new businesses we launched." The team outlined how this approach would require the organization to explore a far wider range of markets and applications than they had previously envisaged. Additionally, the scenario implied radically different thoughts on business models, particularly around licensing and intellectual property. It also stressed the imperative of extensive collaborations with other parts of the business.
Scenario 3) Developed and Solved Right Here In this scenario the business unit wins by selling its services and expertise to outsiders via a consultancy model. The future is characterized by technological convergence, and thus a business unit staffed by a multinational, multi-talented team: system engineers, bio-scientists, and creative artists. "The biggest barrier to change is entrenched mindsets, “explains the future head of innovation, "and so we have encouraged and incentivized our people to engage and connect with the rest of the global organization - and customers outside it." The team recognized that this approach was not only about engineering skills, but about a revolution in business thinking as well. Offering a service to solve deep, complex engineering-design issues for clients in the way this team imagined could even turn the business unit's competitors into customers. --- The scenarios were successful in helping the team see how the possibilities for the future did not rely only on past models. --
Another Case: Overcoming Paralysis at a Software Firm Another technology company approached the authors about a new strategy. However, competitive intelligence revealed that two other software giants were likely to target the same market space. This tended to “paralyze” management from moving forward more confidently on the strategy. A series of scenario workshops posed this dilemma as a key uncertainty, which further yielded two critical uncertainties along with driving forces across a set of four scenarios of the future hi-tech business environment. [The following scenarios are an excerpt from the article:]
Scenario 1) Next New Thing. Technology and consumer charges lead to radical disruption, yet big players are unable to have a major impact in the software space. This is a dynamic, fast-changing world characterized by new platforms, open source production, and new players from emerging countries.
Scenario 2) The Players. Consumer and technology changes are significant and big players are able to enter the organization's market space, causing a major change in the competitive landscape. Here, a few large, integrated players dominate the software and IT world, even as the demand and technology environment changes radically.
Scenario 3) Distraction: Consumer demand and technology changes only incrementally and big players have little impact in this software space. Big players are distracted in this scenario, and suffer from the competition posed by new, low-cost entrants.
Scenario 4) The Dinosaurs. Consumer demand and technology changes incrementally, and the big players enter this software market space with a significant impact. This is a more regulated world, where players with scale are able to establish a stronghold on the industry. “In conclusion, these scenarios allowed the management team to explore their assumption concerning the future business environment and better understand their strategic maneuvering room. They recognized that "the dinosaurs" was their "official future". - the scenario reflected their fear that big players would enter the industry and establish positions of dominance.”
What’s Next for Global Banks. Two Scenarios by McKinsey Global Institute reported by Tab Bowers, Oliver Hamoir, and Anna Mars for Financial Services Practice Journal. March, 2010/PDF/8pps/www.mgi.org. In 2008 the international banking system underwent a crisis which collapsed many banks around the world. In 2009, the recovery was just as dramatic. With such extreme swings, it is important, according to the authors, for the banking system to recognize the fundamental long term structural changes that will challenge the industry over the next 20 years. The Mckinsey Global Institute (MGI) undertook a study of 25 global banks and developed two macro scenarios of banking over the long term. [The following are excerpts from the article.]
Scenario 1) The Midpoint Case. This scenario foresees prolonged recession followed by subtrend growth, returning within two years to pre-crisis rates. industry revenues would grow by 5 percent annually through 2014; Markets in nearly all asset classes would recover as regulators sought to stabilize the financial system, improve risk-management practices, and increase transparency. Moderate regulation of systemically important banks would include pay caps, new rules on exotic products, and tighter capital requirements.
Scenario 2) The Extreme Case. The extreme case envisions a moderate recession followed by structurally slower global growth. Markets would remain severely dysfunctional, and regulators would see banks as utilities, not independent agents, and accordingly attempt to limit their returns and to suppress volatility. Strict regulation would be applied not only to systemically important banks but to smaller entities as well. In this scenario, banks would face much tighter capital requirements. Conclusion. “A surprising reaction to the scenarios is that most banking officers agreed that the extreme scenario was just as likely to happen as the midpoint scenario. A momentum analysis of the 25 global banks in the study revealed five substantive structural forces in the future: 1) the capital shortage triggered by the crisis and recently addressed through several rounds of massive capital raising will endure and get worse; 2) the high and rising cost of long-term funding is likely to continue on a trajectory; 3) returns will be weak by the standards of the past decade. And worse, they will be highly uncertain; 4) the crisis affected emerging markets, especially Asia, less severely than Western ones, which means the emerging market countries are likely to have greater cushioning in future crisis;5) The archetypes constitute a form of destiny: emerging-market giants, riding the back of faster GDP growth, will outperform developed-market universals.”
The Future of the Global Economy to 2030. Alasdair Keith, Richard O’Brian, and Michael Prest, Outsights – Insights From the Outside. Outsights is a strategic consultancy helping organizations to anticipate, interpret, and act upon important external developments in the outside world. 2010/PDF/16pps./www.outsights.co.uk. A diverse group of experts were gathered - economists, environmentalists, civil servants and social theorists - at a workshop to explore the future of the global economy and how the future might unfold to 2030. Rather than creating a conventional economic forecast, with inherent weaknesses that are unforeseen disruptions in the traditional model - the group focused on major uncertainties and five key drivers of change to develop a set of scenarios. These drivers of change include: 1) sustainability – how the earth will support emerging economies; 2) people – increasing population, aging societies and future of labor; 3) technology – innovation, climate change, and technology driving integrating markets; 4) political models and stability – price mechanisms, allocation of resources and conflict; and 5) economic outcomes – growth trajectories of BRIC and other emerging economies, distribution of income, allocation of resources, and inflation and growth. The four scenarios are structured around a matrix. The vertical axis - technology - captures the speed and extent of innovation driven by technology: will technology still be a major force for change, through fast innovation, connecting the world, creating new possibilities, or will it be stifled? The horizontal axis - allocation of resources - examines the future of the economic model of distribution. Will resources - natural, human, financial and knowledge - be allocated through market forces as in recent years, or will an alternative process of control over distribution and allocation develop? [The following is an excerpt from the report:] Scenario 1) Planned Progress (Rapid innovation + Control). This scenario suggests that a model similar to China's today could predominate. Public opinion by 2030 is that market forces needed to be reined in. Society will have been quite successful at meeting the central challenges it faces. Living standards will be good and deprivation uncommon. A new social contract emerges to meet 21st Century challenges, power is ceded to central governments The global economy is shaped by a model of growth favored by China - nations are open to trade but the free market does not fully allocate resources "Manhattan Projects" drive energy innovation and manpower planning; a Board of Nations deals with Carbon C Sustainability - Electorates' response to climate change and resource availability is the initial trigger for central control over the allocation of resources. Resource availability is mainly addressed on the supply-side by governments investing in major programmers to improve energy efficiency and to introduce new technologies - "Manhattan Projects" for energy – and mandating the use of carbon sequestration technologies. There is central government control over the labor market. Government Departments for Manpower Planning enforce very strict visa policies linked to skills - people flows are allowed to promote innovation and make up for skills shortages. There are fierce "wars" for talent. Education is geared to targeted training rather than general education. Technology leads to increased productivity, helping to mitigate the challenges of strained dependency ratios in countries with ageing societies. Technology - R&D is controlled by the state and the military with massive investment in solutions-based technologies and the picking and backing of winners. Investment in science is aimed at finding practical solutions rather than blue sky research and there is tight control over the development of what is regarded as "consumer trivia". Intellectual property is restricted, for example by technology transfer rules. Borders still matter in the physical world and inhibit markets from further integrating through ICT. Political models and stability - Political Models and stability. A new social contract emerges to meet the 21st Century challenges of energy, food, water and climate change, with people ceding power to central governments - akin to emergency powers under wartime. Intense fuel efficiency is mandatory - hybrid, electric, hydrogen and other technologies replace petrol and diesel. This model resembles China today: the Chinese government would find it much easier to mandate the use of energy efficient light bulbs overnight than would any democracy. A Board of Nations, with greater powers than the UN, agree on carbon caps which emerging economies do not perceive as growth inhibiting. Liberties are restricted for the public good. Economic outcomes - The global economy tends towards a Chinese growth model as China exceeds all expectations. Markets are integrated and still interconnected, but the free market does not fully allocate resources. There are price controls to curb inflation. Currencies are managed rather than floating. Steady growth and low inflation have their counterpart in rising inequalities. Scenario 2) Riding the Tiger (Rapid innovation + Free market). This scenario demonstrates a linear continuation of the drivers behind the "great moderation". Looking back from 2030, this world vindicates the faith placed at the turn of the century in a liberal, technological philosophy. Most important, the optimism inherent in that philosophy is as strong as ever. Limited but effective government and the market delivers solutions. ICT drives further integration of markets and people are free to move across borders (both physically and virtually). Dynamic growth sees India boom (even more than China). Convergence of distribution of income between countries - but skills-biased technological change leads to greater inequality within countries Sustainability - The market delivers solutions. As spending on energy and food rises there is an incentive to develop new clean technologies. Innovation comes from "garages", leaving incumbents in the energy industry blindsided. The price of wind energy, solar power and marine energy fall and renewable become a competitive alternative. Desalination programmers increase the amount of drinking water available. Resource availability is addressed and there is a fall in commodity prices. People look back and wonder why all the fuss about rising energy and food prices. People - Borders are further eroded - improvements in ICT make virtual working a reality. People can work "overseas" from their office at home. The world flattens rather than being "spiky" and characterized by hubs. Both skilled and unskilled labor flow freely. There is a huge movement of "bare branches" away from China to a booming India. IVF and better ways of balancing work and family push up fertility rates and redress demographic imbalances in the West. "Personalized medicine" is a reality but with inequalities in health outcomes. Technology - The free market fosters an entrepreneurial and innovative culture with step changes in technology offering solutions to the challenges of the day. There is a second "Green Revolution" based on GM to overcome food shortages. Developments in virtual worlds and the blurring of the distinction between the virtual world and the real world lead to further integration of markets. Consumers can purchase goods direct from the manufacturing country - people often pop down to the shops - which are a "virtual mall". Political models and stability - There is limited but effective government. Suitable multilateral exist to govern global spaces - in the physical world addressing climate and resources, and in the virtual world governing the Internet. Whilst challenges are addressed with mixed success, relative stability is achieved because nations and people feel that their voices are being heard. Economic outcomes - Markets integrate further as the virtual worlds erode physical borders. This allows manufacturers to disintermediate retail outlets, similar to what has already occurred in the music industry with digital technology disrupting existing industry structures. Consumers in the West buy goods directly from Asian manufacturers. Trade is even freer and incomes converge globally. India's population booms as China's ages, giving India the edge in economic growth. In general, incomes equalise between countries more than is being forecast today, but at a cost: skills-biased technological change leads to growing inequality within countries. Overall in the global economy growth is dynamic and inflation low. Scenario 3) On Hold (Stifled innovation + Free market). This scenario relates the story of a world in which liberalisation and technology have not only failed to help meet the challenges faced by societies but have actually exacerbated those challenges and weakened societies. An independent-minded observer - such individuals still exist in the world in 2030 - would have to conclude that the previous quarter century had seen the liberal technological philosophy totally confounded. The Electorates' response to climate change and resource availability is strongly nationalistic. Government regulation inhibits innovation and concerns about cybersecurity which lead to far greater control over the Internet. Globalisation unwinds but in this more "sustainable" world, "gross national happiness" is just as important as GDP. Sustainability - There is a slow, blunt policy response from governments in addressing resource availability issues. Until 2015 there is no marked increase in average global temperatures, leading electorates to discount climate change as a pressing matter that needs addressing. People - Unskilled and skilled labor move freely around the globe. Hubs remain important - a "spiky" world. The global working age population is stable and large migration flows redress imbalances in ageing societies. European governments develop short-term migration systems for the 21st Century. Climate migrants leave the new drought zones - southern US, Australia and Mediterranean countries - for Canada, Russia and Scandinavian countries. Technology - Slow technological growth entrenches conventional thinking e.g. the rise of conservative religion. Even if the technological solutions exist, they are not adopted because societies are risk averse. As economic growth stutters there is less money for R&D, which makes the unpropitious climate for innovation worse. Political models and stability - Governments are weak and frustrated. Lacking the necessary multilateral architecture to address the linked challenges of resources and climate change, this is a world in which the "tragedy of the global commons" really plays out. Failure to address these issues makes the world inherently unstable and there is a very significant risk of aggression between nation states. Disagreements and conflicts develop over access to resources. Economic outcomes - The resource issue has not been solved and sustained high commodity prices limit growth and feed inflation. As transportation costs increase trade slows. Demographic and resource challenges throw emerging economies' growth off track. Even slowing emerging markets do not lead to a dramatic fall in prices. Inequalities in incomes cause strains between countries. Sluggish growth pervades and the specter of stagflation looms large. Scenario 4) Life In the Slow Lane (Stifled innovation + Control). This scenario may be quite close to a future that some Greens envisage. A policy maker in 2030 analyzing the recent past might well conclude that the price of much slower change and less choice had been a price worth paying for stability and greater certainty and averting the dangers which had seemed so threatening in the early years of the 21st Century. Electorates' response to climate change and resource availability is strongly nationalistic. Government regulation inhibits innovation and concerns about cyber security lead to far greater control over the Internet. Globalization unwinds but in this more "sustainable" world, "gross national happiness" is just as important as GDP. Sustainability - The response to climate change and resource availability issues is strongly nationalistic. This leads to rationing to overcome resource constraints. State-controlled "multinationals" dominate resource extraction and distribution in resource-rich countries. Others are either beholden to the world's state energy companies or "colonies" resource-rich areas as in the "new scramble for Africa". China has plans to buy farm land in Africa. Gulf state investors are buying land in Pakistan. People - Human resources are rationed through tough population controls similar to China's one child policy. Populations tolerate this as controlling the number of children is perceived to be the only way to ensure an equitable distribution of finite resources. Pessimism about climate change lowers fertility rates. Population control causes tension in countries facing demographic challenges, as technology does not lead to the required productivity improvements and closed borders mean that migrants do not fill the labor shortfall. Agriculture moves towards subsistence farming and people adopt much simpler diets. Technology - Government regulation limits technologies to existing, simple ones. This gives today's incumbents a huge advantage. Concerns about cyber security lead to far greater control over the Internet and consequently it is no longer an innovative space. Political models and stability - Nations respond to the challenges by turning inward and becoming more nationalistic, creating a nationalism of climate change. After the crisis of free markets there is strong anti-globalization sentiment and governments introduce ad hoc controls over flows of goods, services, people and capital. These measures are accompanied by a wave of rhetoric claiming that they will protect citizens. Many industries are nationalized and the state keeps a close watch on mutuals, which have re-emerged - in the wake of increased distrust of private companies. Economic outcomes - Globalization unwinds as protectionist sentiment envelops much of the world and tariffs are imposed to protect domestic industries. Trade plummets. Aggregate demand declines in this less commercial world. The working week is shorter and the financial sector smaller. This is a world of much slower growth but societies' priorities have changed. In this more "sustainable" world, measures of "gross national happiness" are just as important as GDP as the primary measure of a nation's performance.
Mining and Metals Scenarios to 2030. World Economic Forum (WEF) in collaboration with over 250 constituent leaders from the private sector, government, academia, and international and non-governmental organizations in a strategic dialogue structured by scenario planning methodology. Workshop series coordinated by Jan Klawitter, Associate Director, Head of Mining & Minerals and Kristel Van der Elst, Director, Head of Scenario Planning. 2010/www.weforum.org/Natural Resources Scenarios to 2030. In 2010, the WEF scenario workshop considered the following central question: “How will the environment for the global mining and metals sector look in 2030?” The project objectives were to stimulate dialogue and mutual understanding between the public and private sectors and civil society regarding the future of the mining and metals sector in a non-threatening context and deepen insight into the complex context in which the sector operates by bringing together multidisciplinary and multistakeholder perspectives. The workshop provided useful tools to improve strategic decision-making and identify strategies for collaborative action. Out of this process came three scenarios presented through a publication and a video. They have been developed and selected by the participants of the project through numerous discussions, face-to-face, and virtual workshops. These scenarios are involved stories about the future context that are likely to be relevant, plausible, challenging and divergent. Scenario 1) Green Trade Alliance. The world is divided and countries are defined economically by whether or not they belong to the Green Trade Alliance (GTA), which was formed to promote environmental sustainability without compromising competitiveness. In 2030, the world is divided and countries are defined economically by whether or not they belong to the Green Trade Alliance (GTA),formed in 2016 to promote “environmental sustainability without compromising competitiveness.” GTA countries, including some industrialized, resource-rich and developing countries, have experienced a period of accelerating innovation and lifestyle changes. While there is strong alignment among GTA countries, non-GTA countries operate independently. Scenario 2) Rebased Globalism. The world is committed to realizing the benefits of global interconnection but has become far more multi-polar; power comes from control of resources and possession of capital, with resource-rich countries playing by their own rules. In 2030, the world is committed to realizing the benefits of global interconnection but has become far more complex and multipolar. Power comes from control of resources as well as possession of capital, with resource-rich countries playing by their own rules. Civil society has gained power, resulting in various local laws that affect global corporations. Scenario 3) Resource Security. The world sees a breakdown in globalization as nations prioritize narrow self-interests; they hoard domestic resources and engage in neo-colonialism and import substitution strategies. In 2030, the era of globalization is a distant memory as nations prioritize narrow self-interest. They hoard domestic resources, enter cartels based on regional and ideological alliances and resource blocs, and engage in neo-colonialism and import substitution strategies.
The Future of the Global Financial System. Scenarios to 2020. Max von Bismarck, Director and Head of Investor Industries, Bernd Jan Sikken, Associate Director and Head of Emerging Markets Finance, and Nicholas Davis, Associate Director, Scenario Planning, WEF. 2009/PDF/29pps/www.weforum.org.. A range of external forces and critical uncertainties will shape the pace of power, which is shifting from today’s advanced economies to the emerging world. This means that the degree of international coordination on financial policy is crucial to explore and understand the future of the global financial system. The report explores four challenging scenarios with over 40 driving forces interlinked with the scenarios. Each force is described extensively, with background data, a checklist on relevance to the central question, and results of priorization surveys gathered from participant views on impact, timing of impact, and the measure of certainty/uncertainty of driving forces. These scenarios were developed on a matrix of two key uncertainties: the pace of geo economic power shifts and the degree of international coordination of financial policy. These long term scenarios were developed using comprehensive industry facts, figures, and forecasts that support the underlying driving forces. [The following is an excerpt from the report:] Scenario 1) Financial regionalism: A world in which post-crisis blame-shifting and the threat of further economic contagion create three major blocs on trade and financial policy, forcing global companies to construct tripartite strategies to operate globally. This is a world in which post-crisis blame-shifting and the threat of further economic contagion have created three major blocs on trade and financial policy, forcing global companies to construct tripartite strategies to operate globally. As the crisis deepens in the US and Europe through 2010, the emerging markets walk away from a series of global talks, reject Western models and ideals, and form their own bloc of domestically focused economies. The US is isolated. With the exception of tourism and energy materials, most trade flows among the blocs decline sharply. Energy security becomes a key issue. Key indicators and events: Global growth is moderate but highly skewed, with emerging economies posting results of 9% while the US and EU remain at only 1.2%. Average global growth is 3.2%, the US dollar and the euro are no longer the sole reserve currencies, thanks to the advent of a trade and currency regime within the newly created Eastern International Economic Community; and global economic power and geopolitical primacy have shifted firmly East, with China acting as the leader in Asia. By 2020 the financial world is split among the three regional blocs—the US-led Democratic Trade Alliance, the expanded EU area and the Eastern International Economic Community led by China. The global landscape is therefore characterized by old and new champions seeking to operate on a regional basis, with Asian financial institutions dominating the global landscape in terms of size. Scenario 2) Fragmented protectionism: A world characterized by division, conflict, currency controls and a race-to-the bottom dynamic that only serves to deepen the long-term effects of the financial crisis. This is a world characterized by division, conflict, currency controls and race-to-the bottom dynamics that only serve to deepen the long-term effects of the financial crisis. As the global recession bites, a range of other events, including inter-state conflict, domestic unrest and natural disasters, combine to make things worse. Countries try to look after their own economic interests, blaming each other and turning to populist, protectionist policies. Resource conflicts emerge, and security threats and terrorism keep nationalism and protectionism alive despite the high economic costs. Key indicators and events: global growth averages just 2.3% as debt unwinds in developed markets and almost all markets are negatively affected by economic stagnation and a series of natural disasters; capital controls and severe restrictions on the movement of goods and people exacerbate the economic malaise; the Eurozone disintegrates in 2014 under the pressure of public debt defaults and fundamental disagreements among members. The financial world is extremely localized and highly volatile, with major arbitrage opportunities for those with the ability to execute trades across borders. Unfortunately, capital controls in most jurisdictions make this very difficult, and political risk is high. Scenario 3) Re-engineered Western-centrism: A highly coordinated and financially homogenous world that has yet to face up to the realities of shifting power and the dangers of regulating for the last crisis rather than the next. This is a highly coordinated and financially homogenous world that may yet have to face up to the realities of power shifting to the East and the dangers of regulating for the last crisis rather than the next. With emerging economies severely affected by the global recession, the West maintains economic and moral primacy by playing a leading role in corporate restructuring, driving productivity increases and maintaining free trade globally. Its crowning achievement is the reform of existing international financial institutions—dubbed “Bretton Woods II”—and the creation of a supranational regulatory authority. Unfortunately, Bretton Woods II falls short of the needs of emerging economies and the new regulatory regime fails to consider structural flaws in risk management, leading to renewed fears of an even bigger crisis. Key indicators and events: global growth is 3.6% overall for the decade, with growth in the advanced economies surging to 3.1% and the emerging nations averaging just over 6% (see Figures B1 and B2); with slower growth in emerging economies and rising exports of highly innovative products and services from the US and Europe, global imbalances unwind slightly. After being dominated for a short time by politicians and regulators, the financial world is once again a major engine of profitability and growth managed by insiders. With emerging market exchanges marginalized and those in the developed world greatly restructured, the advanced economies drive a new phase of growth. Scenario 4) Rebalanced Multilateralism: A world in which initial barriers to coordination and disagreement over effective risk management approaches are overcome in the context of rapidly shifting geo-economic power. Initial barriers to coordination and disagreement over effective risk management approaches are overcome in the context of rapid shifts in geo-economic power. The global community learns from its mistakes through sharing: As the US goes through successive crises and the emerging economies battle their own problems, the world eventually realizes that meaningful collaboration is the only way forward. Major shifts in international institutions and a new recognition of the meaning of global governance imply that the financial system is better suited to the challenges of a complex, interdependent world in 2020, if not at all perfect. Key indicators and events: global growth is initially depressed to approximately 2.5%, but recovers to average 3.6% for the decade as emerging economies post particularly strong results. The US and EU continue to struggle with restructuring and deflationary pressures, with average growth around 1.8% (see Figures D1 and D2); severe weather events in 2017 induce a second major financial crisis in the US, creating renewed incentives for international financial cooperation and risk management. Emerging markets set the pace for economic growth, cooperation on financial policy and new approaches to systemic financial risk. The financial system is globally integrated but, given the rapid growth in the emerging markets, in many cases dominated by BRIC-focused players.
One Model for a New World Economy. Jamais Cascio ( Jamais is a senior fellow with the Institute for Ethics and Emerging Technologies (IeeT) - promoting the ethical use of technology to enhance human capabilities.) This scenario was taken from Cascio’s blog, March, 2009.
The industrial-era economic system has ended. Many books and papers bear titles that include “the end of,” and this is certainly one of them. In this blog, Jamais Cascio considers some of the possible post- industrial era capitalism models that may likely emerge over the next twenty years. Early indicators at this point do not bring a clear vision, but it is vital to take-on and think-through the possibilities in an age of burgeoning populations, peak oil, and environmental stress. Scenario) The Late 2020’s Future: Resilience Economics. “The trigger was a phrase we’d all become sick of: “Too Big to Fail.” The phrase had moved quickly from sarcasm to cliché, but ended up as the pole star for what to avoid. Any economy that enabled the creation of institutions that were too big to fail—that is, whose failure would threaten to collapse the system—could never be thought of as resilient. And, as the early 21st century rolled along, resilience is what mattered, in our environment, in our societies, and increasingly, in our economics. Traditional capitalism was, arguably, driven by the desire to increase wealth, even at the expense of other values. Traditional socialism, conversely, theoretically wanted to increase equality, even if that meant less wealth. But both 19th/20th century economic models had insufficient focus on increasing resilience, and would often actively undermine it. The economic rules we started to assemble in the early 2010s seek to change that. Resilience economics continues to uphold the elements of previous economic models that offer continued value: freedom and openness from capitalism at its best; equality and a safety net from socialism’s intent. But it’s not just another form of “mixed economy” or “social democracy.” The focus is on something entirely new: decentralized diversity as a way of managing the unexpected. Decentralized diversity (what we sometimes call the “polyculture” model) means setting the rules so that no one institution or approach to solving a problem/meeting a need ever becomes overwhelmingly dominant. This comes at a cost to efficiency, but efficiency only works when there are no bumps in the road. Redundancy works out better in times of chaos and uncertainty—backups and alternatives and slack in the system able to counter momentary failures. It generates less wealth than traditional capitalism would, at least when it was working well, but is far less prone to wild swings, and has an inherent safety net (what designers call “graceful failure") to cushion downturns. Completely transactional transparency also helps, giving us a better chance to avoid surprises and to spot problems before they get too big. The open-source folks called this the “many eyes” effect, and they were definitely on to something. It’s much harder to game the system when everyone can see what you’re doing. Flexibility and collaboration have long been recognized as fundamental to resilient systems, and that’s certainly true here. One headline on a news site referred to it as the “LEGO economy,” and that was pretty spot-on. Lots of little pieces able to combine and recombine; not everything fits together perfectly, but surprising combinations often have the most creative result. Lastly, the resilience economy has adopted a much more active approach to looking ahead. Not predicting, not even planning—no “five year plans” here. It’s usually referred to as “scanning,” and the focus is less on visions of the future than on early identification of emerging uncertainties. Resilience economists are today’s foresight specialists. What does this all look like for everyday people? For most of us, it’s actually not far off from how we lived a generation ago. We still shop for goods, although the brands are more numerous and there are far fewer “big players”—and those that emerge tend not to last long. People still go to work, although more and more of us engage in micro-production of goods and intellectual content. And people still lose their jobs and suffer personal economic problems… but, again, there’s far less risk of economic catastrophe, and some societies are even starting to experiment with a ”guaranteed basic income” system. Is it perfect? By no means. We’re still finding ways in which resilience economics isn’t working out as well as past approaches, and situations where a polyculture model doesn’t provide the kinds of results that the old oligarchic/monopoly capitalist model could. But those of us who remember the dark days of the econopalypse know where non-resilient models can lead, and would rather fix what we’ve made than go back to the past.”
Future Scenarios: How Communities Can Adapt to Peak Oil and Climate Change. David Holmgren (innovator of permaculture technologies). Chelsea Green Publishing, April 2009.
This book illustrates the synergy between peak oil and climate change. The author presents well reasoned chapters describing trends that drive mid-term “energy futures” that are nested within a set of longer-term energy descent scenarios that take place throughout the 21st century. Currently, the world is undergoing an energy transition because we are hitting the limit to the supply of fossil fuels – a geological and net energy limit. Oil may have reached the point of “peak oil” globally sometime between 2005, or, in the near future, 2010. There is tenable evidence that the other fossil fuels – coal, natural gas, and uranium - will ‘peak’ within the next 30 years. At the same time, we are experiencing the effects of climate change. The current energy transition is driven most notably by climate change and peak oil, which represent unprecedented challenges for human civilization. Global peak oil and decline has the potential to shake or even destroy the foundations of global industrial economy and culture. Climate change has the potential to rearrange the biosphere more radically than the last ice age. Each limits the effective options for responses to the other. According to Holmgren, "The strategies for mitigating the adverse effects and/or adapting to the consequences of climate change have mostly been considered and discussed in isolation from those relevant to peak oil. While awareness of peak oil, or at least energy crisis, is increasing, an understanding of how the two problems of climate change and peak oil might interact to generate quite different futures is still at an early stage." The following scenarios illustrate a plausible recast of energy descent through the 21st Century. Scenario 1) Techno explosion. This is a world that depends on new, large, and concentrated energy sources that will allow the continual growth in material wealth and human power over environmental constraints as well as population growth. This scenario is generally associated with space travel to colonize other planets. Scenario 2) Techno-stability. This is a world thatdepends on a seamless conversion from material growth based on depleting energy to a steady state in consumption of resources and population (if not economic activity), all based on novel use of renewable energies and technologies that can maintain if not improve the quality of services available from current systems. While this clearly involves massive change in almost all aspects of society, the implication is that once sustainable systems are set in place, a steady-state sustainable society with much less change will prevail. Photovoltaic technology directly capturing solar energy is a suitable icon or symbol of this scenario. Scenario 3) Energy Descent. This is a world that involves a reduction of economic activity, complexity, and population in some way as fossil fuels are depleted. The increasing reliance on renewable resources of lower energy density will, over time, change the structure of society to reflect many of the basic design rules, if not details, of preindustrial societies. This suggests a ruralization of settlement and economy, with less consumption of energy and resources and a progressive decline in human populations. Biological resources and their sustainable management will become progressively more important as fossil fuels and technological power declines. In many regions, forests will regain their traditional status as symbols of wealth. Thus the tree is a suitable icon of this scenario. Energy descent (like technoexplosion) is a scenario dominated by change, but that change might not be continuous or gradual. Instead it could be characterized by a series of steady states punctuated by crises (or mini collapses) that destroy some aspects of industrial culture. Scenario 4) Collapse. This world scenario suggests a failure of the whole range of interlocked systems that maintain and support industrial society, as high quality fossil fuels are depleted and/or climate change radically damages ecological support systems. This collapse would be fast and more or less continuous without the restabilizations possible in energy descent. It would inevitably involve a major “die-off ” of human population and a loss of the knowledge and infrastructure necessary for industrial civilization, if not more severe scenarios including human extinction and the loss of much of the planet’s biodiversity.
What Would $120 Oil Mean for the Global Economy?Robert F. Westcott (SAFE, former Chief Economist, US Council of Economic Advisors). “Securing America’s Future,” (SAFE) Washington DC, pub. Apr. 2006.
The $120 barrel scenario was prepared for a simulation exercise conducted by SAFE at the 2006 meeting of the World Economic Forum in Davos. The workshop focused on one central question. That is, what would happen in a world of $120 per barrel of oil for a full year? If this happened, oil would be 8% GDP when historically, it had always been in the range of 1-3%. The general macroeconomic supply/demand tendency is, if oil hits a range of over 4%, global recession occurs. When it reaches 7% or over, the result is a severe global recession. This report by Westcott, although published in 2006, had been used as a reference scenario to many futures research reports, articles, and books (including Michael Marien’s Future Survey). Much of what Westcott wrote became prescient when oil hit $100 a barrel at the beginning of 2008. His analysis was spot-on to the US and global effects when the price of oil stretched to over $100 a barrel, as had happened at the beginning of 2008. Throughout 2008 to the present ( first half of 2009), all the impacts described by Westcott were felt worldwide. In her book, “The Tyranny of Oil,” Antonia Juhasz writes about the acceleration to $100 a barrel, “Within days of the New Year, 2008 began with three landmark events. Oil reached $100 per barrel for only the second time in history as gasoline prices began an ascent toward the highest prices in a generation.” The third event was a renewed determination by US democratic leadership to increase public pressure for a transition from fossil fuels to clean energy. By Q4 2008, oil prices declined, but the repercussions were felt worldwide through 2008-2009 (and most likely through 2010), in all the regions of the world, every sector – private and public – and through every governmental organization. Westcott suggests that high oil prices influence an economy in four ways: 1) Demand Effects: each $10 increase in oil prices reduces US household spending power by about $35 billion; 2) Supply Effect: at $120 a barrel, gasoline will cost about $5 gallon in the US and $8 – 9 a gallon in Europe; 3) Policy Effects: inflation rises from 2-3% today to 6-8% and threatens a price wage spiral; 4) Effects on Confidence and Financial Market Psychology: higher oil prices hurt consumer confidence and investor confidence. Scenario) A World of Consistent $120+ a Barrel. “Unlike periods when oil prices jump by $10 or $20 a barrel, a spiking of prices to $120 lead to substantial nonlinear responses by consumers and producers around the world and causes disruptions in normal economic activity. World GDP growth in the past 30 years has averaged 3.5%and when growth slows to just 1% to 2%, a global recession is considered to have occurred. Therefore, a reduction in world gap of 2.3% to 3.6% due to $120 oil represents the onset of a global recession. Thousands of businesses in many sectors of the economy declare “force majeure” and break contracts. Massive waves of legal suits and a surge in bankruptcies. Transportation companies (trucking firms, package delivery firms, local delivery firms, etc.) will begin to cancel services, scale back promised delivery schedules, and many firms declare bankruptcy. Layoffs in these vulnerable industries spread throughout the economy because of traditional economic multiplier effects. Inflation rises from its levels of 2-3% today to 6-8% in this scenario. Global economic growth rates tumble. Meanwhile, with oil at $120 a barrel, government budgets are pinched by the effects of sharply higher energy costs that affect post office fleets, military expenses, police vehicles, and the heating of public schools and government office buildings. Many local, regional, and national governments impose income or property tax surcharges to help cover the impact of higher energy costs. These resulting higher taxes work to reduce consumer spending and will ultimately weaken overall economic growth. Developing countries that are dependent on energy imports will find their budgets especially hard squeezed. Many countries will be forced to choose between importing fuel to keep their economies going and making international debt repayments. The result will be widespread balance of payments problems.” Historically, high oil prices have had clear negative effects on financial markets. The more severe event causes 25% decline in global stock market valuations, temporarily reducing global equity wealth by about $10 trillion (from about $40 trillion today to about $30 trillion). Assuming a 4% wealth effect, this reduces global consumer spending by roughly $400 billion. In this scenario, the negative wealth effect is nearly as bad for consumer spending as the direct negative demand effect of higher energy bills. It is a double negative impact.”
The Future of the Global Financial System – A Near-Term Outlook and Long-Term Scenarios. World Economic Forum (WEF). A 2009 World Economic Forum Report in collaboration with Oliver Wyman, an international consulting firm. During 2008, the World Economic Forum engaged over 250 financial executives, regulators, policy-makers and senior academics at eight different workshops to develop potential long-term evolutionary scenarios for the global financial system. These scenarios can be used to support strategic decision-making and facilitate collaborative action.
The current financial crisis has caused financial institutions, governments, and nation states everywhere to question the fundamentals of global financial systems 101. This report explores the driving forces that are shaping the future of a runaway system and how these forces will affect the future over the next ten years. Question. How might the governance and structure of the global financial system evolve in both the near-term and the long-term future? With the tightening of credit and slower economic growth, some trends unfolding appear to include interventionist regulatory reform, back-to-basics banking (banks beginning the process of repairing their balance sheets); restructuring in alternatives with new players raising new capital to pursue upcoming investment opportunities (when at the same time, the traditional investor base is severely limited in terms of capacity to commit capital). The scenarios in this report examine these trends then forecast beyond into the longer term by taking into account the critical uncertainties, potential discontinuities, and system dynamics of financial markets, investment, and institutions. Some of the driving forces across all the scenarios include: the evolution of energy and commodity prices, global economic growth, fiscal policies, trade regimes, climate change, exchange rate policies, extremism, demographics, and global wealth distribution. [NOTE: The complete scenario narratives and key indicators are available on the WEF website.] Scenario 1) Financial Regionalism. “Is a world in which post-crisis blame-shifting and the threat of further economic contagion create three major blocs on trade and financial policy, forcing global companies to construct tripartite strategies to operate globally. As the crisis deepens in the US and Europe through 2010, the emerging markets walk away from a series of global talks, reject Western models and ideals, and form their own bloc of domestically focused economies. The US is isolated. With the exception of tourism and energy materials, most trade flows among the blocs decline sharply. Energy security becomes a key issue.” Scenario 2) Re-engineered Western-centrism: “This is a highly coordinated and financially homogenous world that has yet to face up to the realities of shifting power and the dangers of regulating for the last crisis rather than the next. With emerging economies severely affected by the global recession, the West maintains economic and moral primacy by playing a leading role in corporate restructuring, driving productivity increases and maintaining free trade globally. Its crowning achievement is the reform of existing international financial institutions—dubbed “Bretton Woods II”—and the creation of a supranational regulatory authority. Unfortunately, Bretton Woods II falls short of the needs of emerging economies and the new regulatory regime fails to consider structural flaws in risk management, leading to renewed fears of an even bigger crisis.” Scenario 3) Fragmented Protectionism. “Is a world characterized by division, conflict, currency controls and a race-to-the bottom dynamic that only serves to deepen the long-term effects of the financial crisis. As the global recession bites, a range of other events, including inter-state conflict, domestic unrest and natural disasters, combine to make things worse. Countries try to look after their own economic interests, blaming each other and turning to populist, protectionist policies. Resource conflicts emerge, and security threats and terrorism keep nationalism and protectionism alive despite the high economic costs.” Scenario 4) Rebalanced Multilateralism. “Is a world in which initial barriers to coordination and disagreement over effective risk management approaches are overcome in the context of rapidly shifting geo-economic power. The global community learns from its mistakes through sharing: As the US goes through successive crises and the emerging economies battle their own problems, the world eventually realizes that meaningful collaboration is the only way forward. Major shifts in international institutions and a new recognition of the meaning of global governance imply that the financial system is better suited to the challenges of a complex, interdependent world in 2020, if not at all perfect.”
The Future of Livestock in Developing Countries to 2030. International Livestock Research Institute and the United Nations Food and Agriculture Organization (ILRI-FAO) meeting held in Nairobi, Kenya, 2006. (In addition to the Millennium Assessment scenarios, this report also includes the scenarios from the work by Glenn J C (2006): “Global Scenarios and Implications for Constructing Future Livestock Scenarios,” aptly integrated into this report.)
The world of agriculture has changed dramatically in the last 25 years and even more so with escalating food prices over the past several years, cumulating into a crisis in 2008. Change in this sector will continue to accellerate in the future as the demand for food and cropland rises. This report presents a summary of workshops organised by ILRI and the FAO to bring futurists, scenarists, and diverse experts together presenting on various aspects of the future of the livestock sector. After discussions about the important drivers of change, story lines were nested within and built around the four global scenarios that were originally developed by the Millennium Ecosystem Assessment, abstracted in this bibliography in 2007 (refer to the Environment and Biodiversity Domain). The Millennium Ecosystem Assessment (MA) was an international work program that was designed to meet the needs of decision makers and the public for scientific information concerning the consequences of ecosystem change for human well-being and options for responding to those changes. These scenarios represent a drilled-down focus on the future of livestock, utilizing the core of the MA scenarios and adopting the same scenario titles. [NOTE: The complete scenario narratives are available on the ILRI website.] Scenario 1) Global Orchestration. “The free-market paradigm dominates for 25 years. Global trade fuelled by widespread liberalization flourishes, with multi-nationals increasing their influence over society. General affluence and the number of wealthy people in the developed world continue to grow, and most emerging economies in 2006 have approached developed status by 2025. But poverty and social exclusion remain key unsolved problems. The global science, technology and research community is polarised into the “global good” and the “consumerisation” factions, with the latter taking an ever more dominant role. The general dynamic is that “those that can” (both in the private and public sectors) go for short-term
opportunities without worrying too much about any but the most obvious long-term repercussions. There are many immediate successes, which fuel global enthusiasm and render those voices trying to draw attention to the longer term problems ineffective and easily marginalised. Global community decision-making bodies (WTO, WIPO, ILO, etc.) focus on areas of easy consensus because the short term benefits (which are presumed will be shared by all) are easy to sell. Indications of longer-term problems are sidelined, on the basis that appropriate technology will be able to deal with any problem. But most developing countries cannot compete in full free market mode, the gap between them and the developed countries continues to widen, and they are mostly excluded from an otherwise highly connected world. Some alternative development options are found, however, stimulated and supported by the global commons-based community. By 2025, a range of environmental and global climate change problems emerges in forms that are very difficult to deal with, and the affluent world is becoming ever more threatened. Eventually, in 2027, the environment changes the game.” Scenario 2) Order from Strength. “In 2030, the world is a fragmented and polarized place. Governments look to their own interests and there is a marked schism between elites (rich countries and the powerful people within them) and the marginalized. Wealth, power and choice are unevenly distributed around the globe and within individual countries. In this “fortress world”, the levels of political intrigue are high and political alliances shift constantly. International organisations such as FAO, OIE, Codex, WTO, and the CGIAR are poorly funded and largely irrelevant. International agreements are hardly implemented. Because the world is unable to negotiate solutions to disappearing natural resources and climate change, these problems have worsened in the past 25 years. This has placed shared natural resources under stress and made access to them increasingly volatile. Even for people in relatively well-off countries, life is uncertain. For many people in less well-off countries, life is brutal, except for the power elites.” Scenario 3) Adapting Mosaic. “In 2030, the world is fragmented, looking more like a patchwork quilt. There are significant differences in economic and political performance between and within nations. Some long-established developed world economies have flourished, but others have stagnated, with declining standards of living, and growing poverty levels, especially in urban areas. Reflecting on these diverging fortunes over the past thirty years, it is clear that pro-active action in learning lessons and in integrating and applying new technologies were key factors in determining different trajectories of livestock systems and their contribution to poverty reduction in the developing world.” Scenario 4) Technogarden. “The livestock sector has changed dramatically over the past 25 years since the international agricultural assessments at the start of the century that planted the seeds that have grown into collective intelligence for improving animal products in what used to be called the developing world. Today there is a rich array of safe and nutritious animal products feeding the 8 billion people around the world. International systems and innovative local applications made the lives of those working in the livestock sector an appealing alternative to urban congestion. There were many causes of these improvements, but the dramatic improvements to rural education have to be a key one.”
The World in 2050. How Big Will the Major Emerging Market Economies get and how can the OECD Compete? PricewaterhouseCoopers. John Hawksworth, director, Macroeconomics. Copyright @ March, 2006.
The PWC report discusses how OECD countries will grow to the year 2050 in purchasing power parity comparisons to the emerging market economies along an overall trajectory of anticipated carbon emissions and climate change policy. The report looks at a number of indicators for G7 countries: US, Japan, Germany, UK, France, Italy and Canada, plus Spain, Australia, and South Korea; and the emerging market economies known as the E7: China, India, Brazil, Russia, Indonesia, Mexico, and Turkey. Among a number of major findings, the report acknowledged that there was no single way to measure growth of OECD against the emerging economies such as China and India. Considering all of the factors, there is overwhelming evidence that the E7 economies will be 25% larger than the G7 economies by 2050. Within the G7, due mainly to population aging, China and Russia are likely to diverge negatively from the rest of the G7 countries. India is the youngest economy with a working age population that will show positive growth over the period to 2050. The report shows that the country most likely to show the fastest growth throughout this period is India. By 2050, India will likely have a GDP close to 60% of that of the US (using market exchange rates). China, although it will slowdown on the overall, will be around 95% the size of the US by 2050. Brazil will be a similar size as Japan; India and Mexico will grow rapidly, becoming larger than Germany by 2050; Russia will not grow due to population aging, but by 2050, it will be a similar size to France; Turkey will be a similar size to Italy by 2050. These long-term projections are subject to uncertainties and thus the report models six scenarios and explores two scenarios in detail. The report cautions that the rapid economic growth of the E7 and moderate growth of the G7 combined will have serious consequences for carbon emissions because of global energy consumption. If countries continue with the “business as usual” approach to emissions policy, the world will experience a doubling of global carbon emissions by 2050. The long-term consequences of global warming will be serious. Two key scenarios (see report for more detail): Scenario 1) Baseline. A baseline scenario in which energy efficiency improves in line with trends of the past 25 years, with no change in fuel mix by country; this ‘business as usual’ scenario acts as a benchmark against which to assess the need for change, rather than as a forecast of the most likely outcome. Scenario 2) Green Growth + CCS. This scenario incorporates possible emission reductions due to a greener fuel mix, annual energy efficiency gains over and above the historic trend, and widespread use of carbon capture and storage (CCS) technologies. Of the scenarios considered in the report, only this ‘Green Growth Plus’ strategy stabilizes atmospheric CO2 concentrations by 2050 at what the current scientific consensus suggests would be broadly acceptable levels. The G7 economies - the US, Japan, Germany, UK, France, Italy and Canada - may need to take the lead in reducing their carbon emissions, given that emissions from the faster-growing emerging economies will almost certainly continue to rise over the next few decades. The author concludes: "Our analysis suggests that there are technologically feasible and relatively low-cost options for controlling carbon emissions to the atmosphere. Estimates suggest that the level of GDP might be reduced by no more than around 2-3% in 2050 if this strategy was followed, equivalent to sacrificing only around a year of economic growth for the sake of reducing carbon emissions in 2050 by around 60% compared to our baseline scenario." "But if this is to be achieved, it will take further concerted action by governments, businesses and individuals over a broad range of measures to boost energy efficiency, adopt a greener fuel mix, and introduce carbon capture and storage technologies in power plants and other major industrial facilities." John Hawksworth
Outsights on the Global Economy – Four Scenarios for the Global Economy. Global Outsight Group. Project participants include: Mark Beatson. Director of Innovation Economics, UK Department of Trade & Industry, Roger Bootle, Managing Director, Capital Economics, Waltraut Burghardt , Senior Director, International Finance, Oesterreichische Kontrollbank, Peter Cornelius, Senior Economist, Global Business Environment, Shell International & Tapan Datta, Director of Economics and Strategy, Emerging Markets. Copyright 2006.
This paper presents four scenarios for the future of the global economy. It discusses key driving forces wih primary dimensions of security and technology. This paper focuses more on non-economic drivers. Four main themes were identified at the workshop: 1.) Technology. How fast will technology develop and be adopted? How much does information technology (IT) impact productivity? What will be the impact of social attitudes and security concerns? 2.) Social attitudes. How will demographic changes be reflected in cultural and social differences? Is the "clash of civilizations" inevitable or over-hyped? What part will ethics play in economic life? How will the work/life calculus play out in different societies? 3.) Environment. At what point - and in what magnitude - will pollution, climate change, and limits to the availability of certain resources make themselves felt in the economic sphere? What role will regulatory regimes play? What happens when health is treated as an environmental issue? 4.) Governance. Are we moving towards more closed versus open models of governance, with freer or protected trade regimes? How will rising security concerns influence political interventions in economic life? How far will the BRICs reshape geopolitics? What role will the media play in the ways we are governed? Here is a brief overview of these highly detailed scenarios. Contact Global Outsight Group for the full report. Scenario 1) Fortress skcolidloG (Goldilocks in reverse). “This is a world of high technology in which fierce competition reigns, with conflict over everything from resources to religion. Rapid development of technology is valued as a means of enhancing security. It is a world of trade blocs and protectionism, slowing the distribution of resources worldwide and eventually slowing growth - and making it potentially very unequal between economies. This is the world economists and policy makers hoped would never emerge again after the lessons of the 1930s. Insecurity is real, not just a high perception of insecurity. (Goldilocks economy refers to an economy where the pace of growth is just right, not too hot and not too cold.) This scenario finds the military driving R&D and innovation in search of greater security, yet security is in reality (not just in perception) much worse than today. The high level of insecurity drives the world into introverted blocs. Among other flashpoints, resource-hungry economies such as China and Japan are drawn into conflict as they attempt to secure their supply lines in a global economy that is initially growing fast and where sustaining growth depends increasingly on the power of the bloc to attract the necessary means of production.” Scenario 2) Fast, Free & Filthy. “This is an alternative high-tech world in which environmental concerns come to the fore, having started with fast, conflict-free growth that ignores the costs of environmental degradation. Eventually, technological innovation is called upon to combat pollution and overcome resource constraints, allowing growth to continue apace in the long run. This scenario avoids conflict through global political cooperation rather than confrontation - with resources and the environment key areas for action. For example, despite massive demand for water, potential water wars are averted through good-faith treaties, the sharing of resources, development of new clean water supplies, advanced desalination technology. Renewable energy is developing rapidly.” Scenario 3) False Horizons “A scenario that is driven by deep value changes, many of which seek to reduce the power of big business and curb the advance of technology. This unstable scenario - a mix of conservatism, welfarism, regulation, anti-business, alternative approaches to security - opens (but does not resolve) a debate on how value shifts may change the direction of the world economy and how long such shifts might last. achieves general security through cooperation, reinforced by a values shift that seeks to counter inequalities and perceived injustices: e.g. potential resentment between haves and have-nots is countered by welfare spending. The values shift is driven both by a moral shift as well as by the understanding that security is linked to income i.e. the shift is not entirely disinterested. But it is not clear how long this shift can last: hence the notion of false horizons.” Scenario 4) Fears & Phobias. “This is a highly insecure world which combines the technophobia of False Horizons with the politics of identity (nationalism even to the point of xenophobia). Nations and economies look inward. also witnesses international cooperation but only where absolutely essential (e.g. to share critical water supplies). There is no ability to deal collectively with less directly threatening issues such global warming - the temptation to "free ride" is irresistible. At the national level, this is a world of highly restrictive regulation, with heavy-handed curtailment of trade in goods, services, people, knowledge and capital. This primarily inward looking, look-after- oneself world is tense, full of fears and a sense of insecurity as a result.”
Corporate Dealings with the Network Economy William deRidder, Futures 38.9 (Nov. 2006). 1103 (16).
The formation of networks in a network economy help companies create new business opportunities. Companies develop new products, open up markets and are continually reorganizing within networks. Companies that want to actively deal with new technology, changes in consumer behavior, and economic drivers will have to work successfully in a network economy. This article focuses on network formation and network economy. The network economy has led to the formulation of the following three laws: 1) David Sarnoffs Law, former-chairman of the RCA Corp: the value of a non-interactive network is proportional to the number of users; 2) Bob Metcalfe's Law, founder of 3Com Corporation and inventor of the Ethernet: the value of an interactive network increases with the square of the number of users; 3) David Reed's Law, researcher HP Laboratories and MIT Media Laboratory: the value of a social network (with open peer-to-peer information exchange) scales exponentially with the size of the network. These laws can be metaphors for worlds observed in scenarios. Sarmoff's Law applies to a reality in classical economics where companies serve their customers in a formal market relation. Customers are seen as solitary, rational actors who maintain a relation to the firm. Metcalfe's Law shows us networks of customers that share information and make choices together. It is assumed that there are no dominant players in such a network. Reed's Law connects to networks where a few dominant actors are present, but there are also a large number of participants that exert little or no influence in the network. In this article, networks have been named according to the 'laws' that best describe the nature of the network concerned. Here are excerpts from the article that describes the three laws and their implications in detail. Scenario 1) Future of Corporations in Sarnoff networks. “The near future will bring deployment of technology. New applications will enable a further reduction of production and transaction costs. For this reason, the search for economies of scale will be a constant battle against time. Market competitors will also try to realize increasing returns by using cost reductions to lower the selling price. Sarnoff networks will in particular bring forth commodities and this development will be strongest in such networks. Merges and takeovers will likely prove to be inevitable, as will be the loss of employment. Possibly, the largest threat Sarnoff networks contain is embedded in the low value of the informal networks concerned. The formalization of the organization, often through empowering protocol and formalized relations, limits the ability of these companies to adjust to not only to new technology, but also to new developments in their market. Where the level of uncertainty rises in the years to come, and the success of organizations will be more dependant on their ability to adjust to new, barely predictable developments, companies based on a Sarnoff network will struggle, in spite of their relative size and financial power. Barbabasi adds: 'These days the value is in ideas and information. We have gotten to the point that we can produce anything we can dream of. The expensive question now is: what should that be?' Nonetheless, a market for mass produced goods will always remain. This market in developed nations may be mature, developing economies offer many chances. Several companies, such as Unilever and Procter & Gamble have already been successful with so called Bottom-of-the-Pyramid products; cheap mass-produced goods in small packaging offered to poor consumers in, mostly, urban areas in the third world.” Scenario 2) Future of corporations in Metcalfe networks. “Many companies focus on the opportunities that a network organization may offer them. Amongst others they look after the possibility of reducing the number of management layers emphasizes horizontal organizational structures. New external alliances are sought and found. Increasingly, companies realize that they cannot survive without these networks. Connectivity with other organizations and institutions has progressively become a prerequisite. Management literature of recent years is filled with analyses, prognoses and recommendations concerning these issues. Consequently the network-company has matured on the drawing boards. But practice is unruly. Even if an organization attains a high quality level, success is not guaranteed. Even more frustrating is the observation that when a business is successful, this success cannot always be attributed to the quality of its products. Watts has remarked: 'The difference between a hugely successful innovation and an abject failure can be generated entirely through the dynamics of interactions between players who might have had nothing to do with its introduction.' In recent research it has become abundantly clear that random networks and rational actors are not common in reality. The future of Metcalfe networks in a growing network economy lies with smaller companies or parts of companies in which personal service based activities are the core business. Especially many smaller and medium sized businesses serve many customers that can be described as actors in a random network. As long as they realize the limits of this situation, chances are slim that these organizations will expect too much of their innovation, production and sales efforts. Ambitious companies focus on Reed networks. Quite possibly they are a part of such networks already without realizing it themselves.” Scenario 3) Future of corporations in Reed networks “Companies that sell products that satisfy the growth needs of the buyer and serve markets containing a distribution system typified by the 'power law' are part of Reed networks. They find themselves in a structure that contains certain characteristics. The most important of these may be the existence of dominant companies and, because of this, the lack of a large segment of middle-sized firms. As a result of this there is a quest for a dominant role in the market. This position is attractive, not in the least from a financial viewpoint. It is this position that often leads to enormous profit. The battle for the largest share of the market is magnified by the expectation that these markets will exhibit a great amount of growth over the following years.”
Postcards from the Future: The Futures of Branding. Nathan Shedroff and Davis Masten. AIGA Postcards from the Future is a new book developed by two brand professionals about the future of the brand industry. Workshops were started within the AIGA’s Center for Brand Experience. The authors, Shedroff and Masten took the results of the workshops and created eight visions in which branding plays key—and often scary—roles. The book combines both visuals and in-depth analysis, making it a source of fresh and challenging thinking to designers, marketers, brand professionals, executives, and cultural anthropologists. The following are brief overviews of eight brand visions. For the detailed report, contact the AIGA. Scenario 1) Economic Nirvana. “In world economies, whether due to new priorities, technologies, understandings, or cooperation, the vast majority of people are now able to meet all subsistence needs (shelter, food, healthcare, work, education, etc.) and have, for the first time for many of them, something called leisure time and new opportunity to pursue other interests. How does this effect the development of global brands? Or, local ones? Do brands face more competition or less? Does everyone become more or less brand-conscious? Does increased prosperity increase the quantity of brands? What about the quality?” Scenario 2) Economic Peril. “The world economy suffers a tremendous collapse. Whether due to lack or resources (or accessibility), too much demand, insecure speculation, or political conflict that destroys the carefully balanced and orchestrated coordination of trade between countries, all monetary systems are severely devalued and a majority of people have problems meeting subsistence needs. Do people even worry about "brands" in this climate? Are they more concerned with quality, substance, or "real" value as a result? Or, are they even more oriented to brands that help them make quick judgments and decisions about their needs? Are they so busy with survival that issues of style, fashion, and more ethereal concerns mostly go unaddressed?” Scenario 3) Demassification. “In a world where technologies have finally made it cost-effective--even profitable-to make customized products for all sorts of customers of almost every type. People can now extensively customize their designs for cars, clothing, pre-made foods, jewelry, curricula, and pets just like many houses have been for a long time. What does this do to traditional brands? If these products can now be changed substantially, are they even the same products any more? Do brands disappear? Can they compete? Do the customization processes and experiences themselves become the significant brands? Do product brands fade and corporate brands become more important?” Scenario 4) Remassification. “For whatever reason (economic, technological, social, or cultural), customization has either not been successful or not been possible. There is a new interest in cultural connection to others and building shared experiences and identities. Status as a member of a group is more important to most consumers than status as an individual. These groups might be cultural, religious, corporate, professional, local, regional, national, or ideological. What might help brands compete in such a competitively reduced set of brands? How do people choose (or do they) which groups/brands make the most sense? How does our construction of identity change or influence the formation of these brands?” Scenario 5) The Mavericks. “Traditionally, only a small percentage of the population has broken-away from the "pack" and pursued their own, ideally original identities. These people tend to be less brand-influenced and more motivated to either eschewing brands or developing their own brands. Imagine what would change if many more people became mavericks in their personal and professional lives. Could the stable order of work and life be maintained without the automated responses by consumers and expectations by companies around mass adoption of consumer brands? What happens when everyone not only establish their own, personal brands, but also forges their own path?” Scenario 6) Environmental Concern. “Through a combination of events and communications, the greater world of consumers finally gain a deep concern for the environment-what they might think of as nature. Not only are environmentally-oriented brands becoming more popular, but also processes that are thought to help the environment are adopted in full force (such as reuse, recycling, composting, reduction, etc.). How do these new concerns change the adoption, perception, and creation of brands? What do products and services that are seen to either have no clear relation to the environment or are actually bad for the environment do to react to these market conditions? Do they reposition? Change their products, services, or resources (if they can)? Do they hibernate?” Scenario 7) Privacy is a Rarity. “Due to an escalation of surveillance technologies, we are watched almost everywhere and at every time-certainly in the public space. Only inside our homes (or in some cases, our rooms) are we physically private and we are almost never private in a virtual space. Cameras watch our driving (and GPS pointers and satellites monitor our speed and route), our working, and our movement in restaurants, bars, casinos, shops, and plazas. Microphones listen into our conversations with customers, colleagues, peers, and family members. Workers from nannies to store clerks to managers-and even some executives are monitored via camera, phone, and email. What effect does this have on the appearance and development of, identification with, and visualization and presentation of brands? Are people less likely to adopt or display brands? Will they tend to use brands as camouflage? Can brands somehow augment our sense of privacy?” Scenario 8) City as Brand. “In an evolution of an already established scenario, more and more cities begin sophisticated, integrated brand development and management projects in both strategies and tactical presentations. Using New York City as a focus, since it has both opportunity and pressing need to reframe itself, what directions can the city take in evolving its already strong brand? How should it differentiate itself from other cities and, indeed, where is it already positioned? What mechanisms can be used to both create and promote new or newly articulated values? Is it possible for a city to have a brand? Is it possible to create or manage a brand for an experience as complex as a city? Who makes the decisions and how can it be managed? Is agreement needed at all levels-or any at all? Is there a process that can be employed? Is there a client? How does one measure success?”
Society in 2025 – What Next for the Make Poverty History Generation?Tom Hampson, Editorial Director of the Fabian Society . Fabian Society, 11 Dartmouth Street, London, SW1H 9BN. Independent Newspapers UK, 2006.
The respected forecasting group Henley Centre Headlight Vision tested public attitudes to help it guess what kind of a society consumers might impact in 20 years' time. Would the values of the “Live8” generation last? In three of the four likely scenarios for 2025, “selfishness appears to outweigh caring about others.” It turns out that consumerism and individualism may prove a more dominant force by 2025. Caring about others or the problems of poverty may take a back seat. The following presents an overview of the scenarios. Contact the Fabian Society for the pamphlet containing the complete scenarios.. Scenario 1) Choice Unlimited. This is a scenario in which today's consumerist culture would become stronger; ethical consumption less mainstream and people would engage with international issues only sporadically. This is the type of scenario in which most people would have "personal home stylists" who would refresh their wardrobes, kitchen and interiors every four to six weeks. Scenario 2) My Home, My Castle. In this scenario, consumers would look inward; are suspicious of each other and encourage the Government to concentrate on consumers rather than global issues. The government look inward, community suspicion grows and government is encouraged to focus on the citizens rather than international issues. Scenario 3) The Puritans Return. This scenario would see people focusing much more on local issues, a rise in self-righteousness, the poor regarded by the masses as undeserving and the government expected to set a "moral" agenda at home. Scenario 4) The Good Life. In this scenario, community involvement grows and politicians come under under increasing public pressure to focus on global social and environmental justice. Green issues would be part of mainstream politics and climate change at the top of the agenda. After this study was published, the Trade Justice Movement was inspired to come up with a visioning exercise to the year 2025 (with additional contributions from Jubilee Debt Coalition.) The group discussed the reality of the business cycle and agreed on the following global and economic trends that are most relevant to business and global consumerism: 1) Growing power of trananational corporations – TNCs will continue to grow in reach, wealth and power. 2) Increased inequality – The rewards of growth are increasingly concentrated in the hands of a very small percentage of the global population. This trend is likely to continue in the West and to spread to emergent economies with unpredictable political, economic and cultural consequences; 3) Climate change - Global warming will be headed to well above 2 degrees C resulting in runaway climate change, with impacts already felt hard in poor economies; 4) Civil Society – More diffuse in the North and South; more militant. Southern involvement in campaigning changes; 5) Conflict, migration, the impact of HIV/AIDs, Water – may also become more pressing issues; 6) Trade – Multilateral/WTO trade system collapses into stasis and irrelevance, retreat into protectionism; more bilateral and regional agreements, increased south/south trade; 7) Oil and commodities – Major global oil shocks; OPEN crisis, huge switch to alternative fuels; 8) Economies and geopolitical power – China 2nd biggest economy in world; India growth too. China likely to continue its dramatic growth through 2010; 9) Migration – Increased protectionism against migration. Unsustainable population growth will be very big, fueling illegal migration and unsustainable use of environment; 10) Power will probably continue to shift to the larger developing countries (China in particular) – this will affect existing institutions and may lead to a new South-South trade agreements and new institutions. 11) World Bank/IMF – will continue to implement fiscal austerity on poorest countries; 12) Increased availability of communications technologies – while the increased availability and accessibility of communications technology potentially developing global solidarity.
Global Economic Prospects 2007: Managing the Next Wave of Globalization. 2007 World Bank - The International Bank for Reconstruction and Development. The World Bank, Washington, DC. ISBN 1014-8906.
This World Bank report examines the stresses and benefits of integration in a global economy. The discussion centers around a long term growth scenario, called the “central scenario” from 2006 – 2030. The results of the scenario describe “a world in which the gross domestic product (GDP) in high-income countries is slated to nearly double and that of developing countries will more than triple. The progressive expansions of China and India, the two largest developing economies and home to half the people of the developing world, are projected to drive the process. Their impact on the global economy will be increasingly felt as their exports and energy use, for example, approach the levels of the European Union and the United States.” World Bank The report then takes a series of projections and simulations built around this central scenario to examine aspects of the evolution of the global economy . The next wave of globalization will see the growing economic weight of developing countries in the international economy, the potential for increased productivity that is offered by global production chains, and the accelerated diffusion of technology. The World Bank also writes extensively about three growing consequences: growing inequality, pressures in labor markets, and threats to the global commons. The following is an excerpt from the report’s central scenario. The full report is available through the World Bank. Central Scenario to the Year 2030. “The medium-term outlook for the world economy remains positive. And while the pace of economic expansion is slowing, developing economies are projected to grow by an average 7.0 per cent in 2006, more than twice as fast as high-income countries (at 3.1 per cent). Over the next 25 years, developing countries will move to centre stage. Global economic growth is forecast to be faster in the 25-year period between 2006 and 2030 than the corresponding period 1980-2005. The output of the global economy rises from $35 trillion in 2005 to $72 trillion at constant market exchange rates and prices in 2030. This is an average annual increase of 3 per cent--2.5 per cent for high-income countries and 4.2 per cent for developing countries. In the central scenario, even though the incomes of developing countries will still be less than one-quarter those in rich countries in 2030, these incomes continue to converge with those of wealthy countries. This implies that countries as diverse as China, Mexico and Turkey will have average living standards roughly comparable to Spain today. While rich and poor countries alike stand to benefit from global economic growth, certain stresses already apparent--in income inequality, in labor markets and in the environment-- become more acute. - By 2030, the world's population rises from some 6.5 billion to 8 billion, with more than 97 per cent of this growth in developing countries. Over the next 25 years, rapid technological progress, burgeoning trade in goods and services, and the increased integration of financial markets will facilitate faster long-term growth. However, some regions, notably Africa, are at risk of being left behind. Moreover, even though many in the developing world are likely to enter what can be called the 'global middle class', income inequality widens within many countries. At the same time, low-wage competition from China, India and other developing countries--not only in goods trade but also in services--will place additional pressure on an integrating global market for labor. Unskilled workers, in particular, may fall farther behind. Managing these forces places a new burden on national policy makers--and on the international community as a whole--to ensure that the opportunities of global integration are broadly shared. The coming globalization also sees intensified stresses on the 'global commons'. Addressing global warming, preserving marine fisheries and containing infectious diseases will require effective multilateral collaboration to ensure that economic growth and poverty reduction proceed without causing irreparable harm to future generations.”
The DCDC Global Strategic Trends Program: 2007 – 2036. Development Concepts and Doctrine Center, published by UK Ministry of Defense, January, 2007.
Strategic Trends is an independent view of the future produced by the Development, Concepts and Doctrine Center (DCDC), a Directorate General within the UK’s Ministry of Defense. IT is a source document for the development of Defense Policy.
Key findings included eight major trends that were transformed into a scenario over the next three decades. These trends are: 1) Resource competition – economic growth and increased consumption will result in greater demand and competition for essential resources.; 2) Climate change - compelling evidence to indicate that climate change is occurring and that the atmosphere will continue to warm at an unprecedented rate throughout the 21st Century. Over the next 30 years, the resource-related challenges to global stability will be diverse, wide-ranging and significant. Climate change and a shifting environment; increasing demand for natural resources, particularly food, water and fossil fuels; a growing and rapidly globalizing economy; urbanization and the emergence of new health challenges will all have major impacts and unpredictable effects. While the global economy is likely to grow during the period, improving material conditions for many people, the combined, uneven effect of these impacts will be to increase uncertainty for many, creating new sources of insecurity, instability and tension; 3) Economic growth combined with the continuing rise in the global population - will intensify the demand for natural resources, minerals and energy. Oil is likely to remain the principal source of motive power, particularly for vehicles, and growing competition for this diminishing resource will lead to a significant rise in energy prices. It is possible that this will cause a slow down in economic growth from 2020, although this may be offset by new sources of energy: coal derivatives, hydrogen fuel cells, bio-ethanol and for power generation, nuclear fusion. 4) Energy market instability - may lead to political and even military interventions in order to protect access and safeguard supply. 5) Food price spikes - increasing demand and climate change are likely to place pressure on the supply of key staples; 6) Evolving family systems - In response to globalization and the pressures of a more uncertain world, networks based on family, clan or tribe structures and extended kinship groups, in common with a more communitarian approach, are likely to proliferate, especially in areas of declining or low prosperity and opportunity. 7) Strategic shocks - an analysis of trends and probable outcomes can only go so far in describing the future, the unexpected also needs to be taken into account - shocks will happen. The discussion in this repot outline ways in which discontinuities may occur. 8) Middle class proletariat - the middle classes could become a revolutionary class, taking the role envisaged for the proletariat by Marx. The following is an excerpt from the scenario developed by an examination of trends to 2030. The complete text of the report can be found at the Development, Concepts and Doctrine Centersite. Scenario: Ring Road Issues. “During the thirty-year period, covered by the study, human activity is dominated by three pervasive “Ring Road Issues”, namely, climate change, globalization, and global inequality. During the next three decades, there are constant tensions between growing interdependence and heightening competition among the nations. As a result, all aspects of human life changes at an unprecedented rate, throwing up new features, challenges, and opportunities. Three areas of change, or Ring Road issues, touches the lives of every human being on the planet by 2040 and aggravates climate change, globalization, and global inequality. The increasing pace of climate change alters the physical environment in which a rapidly growing population lives and its access to habitable land, food and water is under strain. The world economy expands at an unprecedented rate and its different segments become more and more integrated, creating globalized interdependencies and enabling multiple supra-national linkages in all areas of human endeavor. This does not benefit all strata of the society in equal measure. There are gainers and losers. A sizeable section of the society sees substantial improvement in material living conditions while others continue to face hardship and deterioration in their plight. These people suffer from fluctuations within a globalized market-based economy, making their lives full of uncertainties. In all the most affluent societies, rapid, large shifts in global markets, which are increasingly sensitive to uneven supply and changing demand, result in potentially dramatic change in personal fortune and confidence. Globalized communications field aspirations, heightened expectations and serves to expose differences in advantage and opportunity, stimulating grievance and raising the significance of global inequality as a social and political issue. During the next three decades, thanks to globalization, the volume of world trade rapidly expand, cutting across national barriers and overcoming distance. This leads to internationalization and integration of markets for goods, services and labour. Even though this boosts the pace of economic growth, it brings risks for national markets of developing countries, as they are exposed to destabilizing influence of global market. The ups and downs in the global market impact national markets, as they are transmitted through new and more efficient means of telecommunications. Labour comes under intensive pressure. It is “subject to particularly ruthless laws of supply and demand.” To quote the study: Socially, looser forms of political, cultural and economic association multiply, whose existence is largely virtual and dissociated, linking members who are physically dispersed, but who share common interests and seek competitive advantage of association. Politically, globalization raises levels of interdependence between states that are increasingly integrated within the globalized economy. Notwithstanding the increasing global production and improving material conditions for most people, the income disparities widen and poverty continues to be an insurmountable challenge.”
Raising Our Game: Can We Sustain Globalization? The Past and Future of SustainabilityBill Baue. Policy Innovations. June, 2007.
Established in 1987, SustainAbility advises clients on the risks and opportunities associated with corporate responsibility and sustainable development. This report looks to the year 2027 to examine future scenarios for the world’s sustainable development. It brings macro trends into a pattern so readers can understand six dimensions that are encompassed in the four future scenarios. The report uniquely creates the acronym G.A.M.B.L.E. (growth, acceleration, mainstreaming, barriers, leadership, and equity) as the six common aspects to all of the scenarios – indicators that also pose as changing variables. The report ends with seven recommendations, or "new rules" to face the trade-offs involved in choices between environmental and social value. What is in the Cards for the Future? The report proposes four potential scenarios (based on a card game metaphor) for how the future will unfold over the next 20 years, depending on how business attends to social and environmental sustainability. Each scenario corresponds to a card suit (Clubs, Diamonds, Spades, and Hearts) on a matrix with environmental wins and losses on the horizontal axis and social wins and losses on the vertical axis. Scenario 1) Hearts Scenario. “This is the future that the Brundland Commission “pointed us toward," the report states, as it balances environmental sustainability with social development. It projects a scenario where a pandemic slows global transportation, forcing simultaneous attending to human health and curbing environmental impacts. The crisis inspires creative destruction and innovation that ultimately leads to true sustainability. The report acknowledges that the concept of sustainable development has stood the test of time since it was first injected into the political mainstream in 1987 by the Brundtland Commission, though the marriage between sustainability and development has always contained tension. This is a world which demography, politics, economics, and sustainability gel. It is the future that the Brundtland Commission pointed us towards. The early years of this scenario, however, are rough, with a global pandemic shutting down global trade. But in this case the challenges come in forms that drive positive responses, underlining the importance of shared solutions and inclusiveness. Over time, virtuous spirals of improvement set in, in most places. The outcome: a second Renaissance, but across a larger canvas.” Scenario 2) Spades Scenario. “Democratic societies open out higher living standards to growing populations. One key consequence is that natural resource prices rise, but another is that ecosystems are progressively undermined, with most governments unwilling to take the political risks of asking voters to make sacrifices in favor of the common good. The challenges are managed to a degree, thanks to more open societies, but not well enough. Deteriorating environmental conditions gnaw at the islands of affluence.” Scenario 3) Clubs Scenario. “This is a world in which, among other things, the elites learn how to use environmental sustainability as an excuse for denying the poor access to their fair share of natural resources. One outcome is a slowing of the destruction of ecosystems locally, but this future is characterized by protracted periods of social tension – broken with increasing frequency by insurrections. The waves of change build fitfully, chaotically, with closed societies and communities often operating in denial for extended periods. Over time, this erodes islands of sustainability. One outcome is a slowing of the destruction of ecosystems locally, but this future is characterized by protracted periods of social tension – broken with increasing frequency by insurrections. The Spades and Clubs scenarios play out the potential consequences of over-weighting environmental sustainability at the cost of social stability, or over-weighting development in ways that compromise environmental viability.” Scenario 4) Diamonds. “This scenario is bleak – a domino-effect world, in which instead of Adam Smith’s invisible hand, our invisible elbows knock over a series of economic, social, and environmental dominoes. Demographic trends and the spread of western lifestyles devastate ecosystems. The challenges come in forms that disable decision-makers and overwhelm society’s ability to respond effectively. Over time, as fear closes down thinking and creativity, vicious spirals develop in politics, governance, economics, and technology.”
Global Scenarios on Microfinance- Part I. CGAP Executive Committee, World Bank. Focus Notes No. 39, October, 2006.
A major driver for financial inclusion worldwide has been microfinance, a concept that gained extraordinary momentum over the past ten years. The authors at the World Bank ask whether this is strong enough to be irreversible? Will it gather the momentum to reach the billions who still have no access to microfinance? This report takes a regional look at the low to middle income nations and considers regional stability factors in demographics, technology, and new financial structures. Part I herein looks at two scenarios of how wireless information technology impact regional microfinance. According to the World Bank, BRICs (Brazil, Russia, India, and China) are forecast to overtake the G6 industrialized countries over the next 40–50 years in terms of the size of their economies. If one or more of the BRICs were to become unstable and falter, global growth prospects would be seriously compromised. The report asserts that developed country capital, structures, standards, and advice is declining in influence when it comes to BRIC and in turn, what happens in the BRICs will affect the LICs (low income countries). It is becoming apparent that what happens in the BRIC will affect the LICs (low income countries) so that LICs seeking economic growth and political influence will increasingly follow the lead of the BRICs. BRIC models for economic growth are increasingly compelling. Over the next decade, cell phones may be the key to bringing microfinance to very poor and remote peoples. Wireless technology could radically reduce transaction costs and create anytime, anywhere access, even for very poor and remote clients. Most of the microfinance community believe that the government’s best role is to create a friendly policy environment for microfinancial services and not to provide them directly, at least when it comes to credit. However, in the BRICs, many of these countries have populist governments and are increasingly getting directly involved in delivering financial services directly to the poor. The following scenarios provide an overview of the effects of wireless technology on microfinance in these regions. Scenario 1) Massive Access “Wireless technology revolutionizes the way financial institutions and other businesses offer financial services to low-income people. Hundreds of millions of poor and unbanked clients gain access to cell phones, either by owning their own or using someone else’s. This sparks the interest of domestic banks because the costs of executing low-value transactions can be lowered substantially. Because international banks are capturing most of the corporate clientele, domestic banks turn more to retail business. They invest in delivery systems that can reach more people at lower cost, thus improving access for lower-income clients. In BRIC countries, the movement down-market starts with the burgeoning number of lower middle-class consumers. Major mobile phone operators form a new hub that enables international remittances to be securely and cheaply routed to mobile phone numbers. Innovation in handsets and software design spurs rapid customer adoption even among poor and illiterate clients. Regulators appreciate the potential of technology and especially the combination of cell phones, smart cards, and POS, to extend access. In addition, they see wireless technology as a fast and transparent way to track transactions, making it easier, among other things, to comply with international standards that combat money laundering and the financing of terrorism. They amend regulations that limit banking transactions to conventional bank branches, allowing other infrastructure to do double duty as virtual branches. Once customers can make payments, transfers, cash withdrawals, and deposits outside of conventional branches, banking becomes more convenient and less intimidating for them. User-friendly products, some tailored for illiterate and semi-literate customers, attract many poor clients. The increased volume of remittances and internal transfers stimulates demand for other services. Higher volumes and lower costs allow deeper penetration. In the BRICs, as well as LICs such as Bostwana, Kenya, and Namibia, governments opt to make social transfer payments to their “stem” of poor citizens through banks and other financial institutions, using electronic payments and wireless technology. Once deployed, this wireless backbone can handle huge numbers of transactions, including not only financial services but also other development activities. For instance, cell phones and wireless Internet kiosks transmit basic health education to poor households, market information to remote farmers, and rainfall conditions to holders of weather insurance. Easy access to information makes it far simpler for those in developing countries to tap into global best practices. It also ensures that governments are held more accountable.” Scenario 2) Deeper Digital Divide. “Technology is adopted mainly to serve the easier-to-reach, wealthy clients and the substantial middle class in BRIC countries. The high fixed cost of technology infrastructure allows large banks to push out small players. The large banks find other opportunities more attractive than extending the lower income frontier of the retail market, thus leaving most of the poor outside the system and worsening the digital divide. As financial institutions move toward automated processes, clients interact more with machines than with people. Poor people who do not fit lenders’ automated profiles lose out on the benefits of conventional microfinance, including the personal relationships with loan officers that make uncollateralized, unscored credit possible, and interaction with other poor clients, which builds confidence and empowerment, especially for women. Governments in developing countries are concerned that increasing numbers of financial transactions, including deposit collection, occur outside of the banking sector, beyond their limited capacity to supervise. In reaction, they tighten financial regulations, prohibiting banking services via cell phones and other electronic means outside of bank branches. Governments also clamp down on nonbanks, such as telecommunications companies, offering card and cell phone-based payments/banking services. The trend away from legalizing immigration in Europe and the United States blocks access to bank accounts and possibly even easy cell phone subscriptions for immigrants in the North. This makes it harder to send funds safely and cheaply back home to family members. The traditional donor community and other international actors supporting microfinance assume that technology can solve the access problem commercially: they think most of the job is done. They lose interest in financial inclusion. Most poor people are left behind, and entire LICs as well. This shift in interest leaves countries like Sudan and Zambia with limited support for building financial access, even while they remain on the fringes of the wireless revolution.”
Global Scenarios on Microfinance – Part II.CGAP Executive Committee, World Bank. Focus Notes No. 39, October, 2006.
A major driver for financial inclusion worldwide has been microfinance, a concept that gained extraordinary momentum over the past ten years. The authors at the World Bank ask whether this is strong enough to be irreversible? Will it gather the momentum to reach the billions who still have no access to microfinance? This report takes a regional look at the low to middle income nations and considers regional stability factors in demographics, technology, and new financial structures. Part II herein looks at two scenarios of how state institutions impact regional microfinance. This is part II of the overview of global microfinance scenarios that look closer at the trend of new state credit programs in poor countries. According to the World Bank, “The pendulum seems to be swinging back from widespread privatization and liberalization toward more state control—and possibly even nationalization in some cases. In between, there are several other options: requiring institutions to lend to priority social sectors (India, Colombia); requiring financial institutions to serve the communities from which they receive deposits (as with the U.S. Community Reinvestment Act); linking government contracts to banks’ social performance (South Africa); creating fiscal incentives to invest in priority sectors (as has been done in the Netherlands); or fostering moral suasion for banks to commit to access targets (South Africa’s Financial Sector Charter).” World Bank As states exercise more control over retail financial services, some may heed the accumulated lessons of microfinance experience. Armed with good practice guidance, governments could potentially provide these services directly and do a good job. On the other hand, governments may continue naturally to succumb to the significant social and political pressure to deliver subsidized, uncollectible loans. Scenario 1) Successful State Involvement. “A few governments take an informed, long-term approach to the use of their massive state bank infrastructure to offer sustainable financial services. They follow examples such as Bank Rakyat Indonesia, a state bank that successfully built firewalls between politics and the technical business of banking, resulting in sustainable provision of more than 31 million savings accounts and 3.2 million small loans outstanding at present. Based on sound practices and fuelled by massive injections of start-up capital, access skyrockets. Loan repayment is high, and state banks become profitable. BRIC and other governments channel social transfer payments to the poor through state and other commercial banks, enabling many people to have bank accounts for the first time. Governments professionalize their state savings banks, which become better at collecting, protecting, and investing poor people’s savings. Other governments successfully motivate private banks, for instance by entering into public/private compacts to extend access. They also encourage developments like credit bureaus that enable the poor to develop credit histories transferable from one provider to another. They work together with banks to develop common financial architecture like interoperable ATMs and POS machines and cell phone-based transaction networks that reduce costs and increase mobility of poor people’s money. The few success stories where governments in both BRICs and LICs have really insulated credit from politics and replaced traditional approaches with sounder practices draw imitators throughout the developing world. For one thing, aid flows, except in the poorest countries, are increasingly small relative to private capital flows and even smaller compared with remittances from workers abroad (see Figure 5). In 1988 remittances were less than half of official flows: by 2001 they were more than twice the size of official flows. As the cost of wiring money drops, and the number of migrants increases, remittances are likely to become an even more important source of money for the poor. The composition of the international donor community is also changing. New actors are emerging on the scene, both governments and private players. The BRICs and some of the oil-rich Islamic states are playing an increasing role as donors. Fortunes made in business, and especially in technology, are now being deployed to solve some of the problems of development. Warren Buffett’s spectacular $31 billion contribution makes the annual budget of the Bill and Melinda Gates Foundation (already the largest private foundation in the world) bigger than the GDP of over 40 countries.” Scenario 2) Flood, Distortion, and Collapse. “BRIC and populist governments reject so-called international “good practice.” They blame the free market orthodoxy emanating from the West, and especially Washington, for deepening poverty and social divides in their countries. These same governments experience immense pressure to deliver resources quickly to poor and remote constituencies. In addition, a number of governments (especially in BRICs and some Middle Eastern countries) are so concerned about the potential impact of youth unemployment that they rush to create unsustainable microcredit schemes as a solution. As a result, state-owned “Banks for the Poor” crop up in dozens of countries. Interest charged on the loans is far below the cost of delivering them, and borrowers are not compelled to repay them. This kind of unfair competition squeezes out sustainable private MFIs. In BRIC countries, the governments finance these efforts as part of their welfare policy. In LICs, donors grudgingly agree to bankroll these new state players, in fear of being completely left out of the development debate in countries increasingly hostile to free-market ideas. Some countries reinforce each other’s stances, as happened in 2006 when oil-rich Venezuela donated $100 million to the Bolivian government for state-run microcredit, threatening to undermine Bolivia’s well-established and viable private MFIs. South-to-South dialogue and technical support hasten the spread of the new state credit initiatives throughout the developing world. Interest rate ceilings are imposed at levels too low for private microcredit players to survive, and so the subsidized and weak state-run Banks for the Poor are left as the only source of financial services for the poor. Thus poor people have access to their services only as long as the subsidy and political interest lasts.”
The Coming Global Knowledge Society: How to Analyze and Shape Its Future. Peter H. Mettler. Futures Research Quarterly. Spring 2005. p. 51.
The author describes global trends and the dynamics of trends by examining two scenarios of the future with two different timelines: 2030 and 2070. The following global trends were highlighted in the scenarios: 20 million people, completely self-determining and economically almost self-sufficient are heavily networking globally in respect to science, knowledge and know how, with strong feelings of responsibility for future generations as well as to help develop less developed regions. • Social futures, e.g., wealth-distribution, life-expectancy and population policy, as well as future studies in leisure, sport, professional activities, etc.; • Cultural futures, in particular the dialectics between individual and (world) society, as well as future studies on values, tolerance, morality or criminality; • Urban futures, in particular of megapols, as well as questions such as: "Would megapols be capable of forming countervailing forces to TNCs?" And/or: Would they be developing into a fourth political power besides the UN, nation-states and global-economy-players?; • Security futures, e.g., how the military and the armament industry, the technology of ABC weapons and their international proscription, the aerospace industry or SDI/NMD might develop; • Ecological futures, in particular man-made climate changes, weather doomsdays, water shortages and genetic manipulations in respect to agriculture and food as well as to humans; • And finally the question, how a decline of world population to -5 billion people could come about by 2150? Scenario 1) 2030 – Virtually the Same as 100 Years Ago. “The year 2030 is reminiscent of what it was like 100 years agoand what the situation led to then. Superpower Structure: The situation is comparable with that of 100 years ago in thatnow, as then, there are hardly any fixed points of reference anymore; chaos prevails.Traditional factors—such as states, their military and securityforces (the state's monopoly of power and strength), their economicpower (with commissions from the state or income from the state'stax monopoly) and their territory—have largely lost their significance:the TNCs that have taken their place are neither wanting norable to take these functions over. TNCs are aware of their responsibilityonly towards their shareholders, or at best towards their customers.In countries, (large) regions and even (sub-)continents—the Islamicworld, China and/or India—internal wars have broken out(ideologies, separate regions and army units fighting against eachother). Some of this is about spheres of influence. And in someplaces there have already been millions of casualties.Old and new ideologies are about conquering the world andeternal happiness, as well as condemnations of opponents, going as far as new calls and plans for genocide. Two entities play special roles: Urban Agglomerations: The chaotic conflicts are mainly fought in the urban agglomerations: in each of the approximately 50 megapols with more than 35 million inhabitants there are different victors, who enter alliances with like-minded rulers of other megapols (wherever they may be in the world), and are not afraid to use hunger as a weapon for suppression within the regions. Telematics: Telematics starts to be used to usurpers' ends, Orwell's visionswere comparatively benign. Population: The world population declines, for the first time in over 200years. Migratory movements involving hundreds of millions of peopleleave behind completely devastated areas. To combat this migration,local armies in the shape of citizens' vigilante groups are in themaking. Military Structure: Although the armies of the former national states no longer exist(owing to the fact that the states are bankrupt), there are still hugearsenals of weapons available, constituting an incalculable risk (likethe old Soviet nuclear weapons did after the implosion of the USSRin 1989). In particular, there are signs that fundamentalist fanatics are contemplating (and planning) how they could get hold of them. Scientific and Technological Development: Science and technology are scarcely global any more either:they are compelled to serve the high and mighty and do researchand/or development for their purposes. Economy: Due to the almost complete collapse of world trade, there areextremely acute supply shortages: between 1980 and 2010 the rangeof varying production processes was given up in favor of specializationand market niches almost everywhere in the world (comparablewith the situation in the USSR's successor states after the former hadimploded). Education, Cuture, and Religion: Helplessness and rashness prevail, along with incriminationsand the search for transcendental explanations for the disaster; butthere is also a return to classical religions and values. The latter resultin the most varied recommendations as to how to overcome the crisis.” Scenario 2) 2070 or Outcome of the Renewed Experience. “Where there is danger, help grows too. Superpower Structure: History does not repeat itself, but historic parallels do keep occurring: due to the situation in the year 2030, which retrospectively (i.e., as seen from the year 2070) can be seen as the climax of the crisis, a new power structure developed, which has not yet (i.e., by 2070) managed to lay down new basic rules that have any chance of retaining their validity for any length of time (e.g., after the Viennese Congress), but which have, nevertheless, succeeded in dissuading the world from using its weaponry and forcing it back to the negotiating table. Since then, more and more proposals for a new version of the UN and a new world economic structure were put forward. Four world players are likely to make up this new UN / world: • The parliament of the approximately 100 largest megalopolises, comprising about 1/3 of the world population. • The parliament of the approximately 100 largest TNCs, making up for around 40% of the world's GNP. • The parliament of the approximately 350 (nation) states, which still have approximately V4 of the world's GNP at their disposal. • The parliament of the approximately 20 economic blocks, which account for around 85% of the world's GNP. Their intertwining links no longer permit any single "entity" to grow beyond a given size (+7%), and the hierarchical systems (at least 4 levels) incorporate so many early warning systems that crises can and must be dealt with at an early stage: UN Megapols' TNCs' States' Economic blocks'. Urban Agglomerations: Since poverty vk'as greatest here, some of them joined to form a democratic alliance against those megapolis that were ruled in criminal ways. Their example encouraged the inhabitants of megapols ruled in criminal ways to gradually get rid of their rulers. They were assisted herein by both, the old (political) structures still in existence (e.g., international concerns, national states and political economic blocks such as the EU) and by telematics, which had been impossible to keep under total surveillance for a long time. Apart from this, people—in accordance with their own needs—made themselves relatively self-sufficient locally (i.e., in municipal districts) and could thus be blackmailed only to a certain extent. In a new sense, Mao's old saying, "Let 1,000 flowers bloom" came back into favor again. Telematics. During the last decades, the vast worldwide telematics networkhas passed its democratic test. Dictatorships covering small areas (even including those ruling several hundred million people) were not able any more to conceal the truth from the people they suppressed. And luckily, almost everywhere worldwide there was already so much telematics know-how available that local "experts" were unable to hinder communications to any substantial degree or penetrate even the most suppressed people. Population: The view that there is an optimum population for each area isnow scarcely questioned. It has finally been recognized that the educationof the population and its scientific and technological knowhow—not just its sheer numbers—constitute the capital of each region.Since medical sciences had managed by 2055 to increase average life expectancy by over 14 years (and remained stable since), world population has now stagnated at the level of 12 billion. Military Structure: There are just a few military units with geo-strategic tasks (andabilities), which report to the UN; apart from this, there are securityforces specific to individual territories, with technically superiorequipment but rotating staff. The territorial forces from two to threeneighboring territories can prevent any invasion attempts by individualunits, whilst the units with geo-strategic tasks can dissolve anyalliance between several territorial forces. Scientific and Technological Development. Numerous experts (from all areas) opposed usurpers worldwide,committing themselves to more local/regional attempts to solve problems. Now, however, world associations exist again, even if they are not geared towards individual disciplines as they were previously. The percentages of all four parliamentary budgets earmarked for science and technology are rising again, but the qualification requirements are tougher than ever before: the more funding an expert or a program/institute gets, the tougher they become. Economy: The term "economy" (including the above-mentioned GDP rates) is currently being replaced by complicated regional development indices, which are now nearly fully developed, and which subordinate thinking in terms of finance and capital to thinking in terms of quality of living. Education, Culture and Religion: It is here that the actual fate-turning revolution has taken place.The egoistic, partial and particular manners of thinking—decisively shaped by the Occident—which so frequently resulted in criminal actions, realized its own limits in view of all the dangers, dimensions and complexities. But the old dangers have not really been eliminated/overcome,nor is there any safeguard against new dangers which will certainly emerge. Emphasis again is put on the concept of socially and environmentally tolerable flexibility.”
Global Innovation Outlook 2.0 – IBM. Samuel J. Palmisano, Chairman and CEO, IBM Corporation.
The Global Innovation Outlook provides a platform for candid and open conversations about important issues of our day and in the future. Contributors include IBM’s top researchers, consultants, and business leaders. The Global Innovation Outlook also included 180 experts on business and business innovation. 2020 Scenario of the Corporation of the Future. In 2020 the corporation is modeled after Hollywood’s studio system where talent is recruited for very specific projects. The corporation creates an outside entity, subscribes internal and external talent to it, “creates stuff” (via project management), then deploy assets. “By 2020 the change is driven by a new generation of workers more comfortable with the idea of job fluidity rather than job permanence. The 2020 employee’s primary identification is less with the company and more with the “company they keep”—the larger network of colleagues and peers who share their interests, expertise or worldview. The employee of 2020 are coders or computational biologists or designers or educators first, and employees second. But a more fluid, flexible and mobile workforce is just one factor driving this change by 2020. Also helping to redefine the notion of the enterprise is the confluence of collaborative innovation, networked technology, and viable new business models such as business process outsourcing, customer-driven design and peer-to-peer production. Thus by 2020 the “specialized enterprise” comes into being. The ’90s version of this idea focused on “core” vs. “non-core” functions and activities. The goal was to contain what was core, and ship out the noncore to lower-cost providers. By 2020 the nature of competition becomes increasingly intense, global and unpredictable—requiring strength across the board. The objective therefore, is to decompose the enterprise into its component parts, understand with great precision what is truly differentiating—where the enterprise has strengths and weaknesses—and then make decisions about how to build, buy or partner for world-class capability. In this model, companies can focus their energies on their true point of differentiation, instead of trying to master many domains and ultimately squander competitive advantage by dispersing focus and investment. Rather than existing as static and fixed organizations, the enterprises of 2020 essentially become an aggregation of specialized entities with complementary interests—expanding, contracting and reconfiguring themselves in a way that best adapts to or even anticipates market dynamics. Paradoxical as it may sound, these super-flexible configurations prove more stable over time.”
Scenario Planning at British Airways – A Case Study. Long Range Planning, Vol. 29, No 2. 1998.Given the competitiveness of the airline industry, British Airways' Chief Economist, DeAnne Julius, proposed the use of scenarios to the Chairman's Committee. Because the expected benefits were somewhat intangible the decision was made to treat the exercise as an "experiment" to see if the process was suitable for use within the company. The exercise was divided into two phases: scenario development and scenario workshops. Each phase was led by a senior member from the Corporate Strategy department. The aim was to link the scenario workshops to the business plan of British Airways. Driving Forces for the scenarios included the information revolution, economic restructuring, and global competition. (See report for the complete scenarios.) Scenario 1) Wild Gardens. In "Wild Gardens" global integration goes so far that it is impossible to build lasting new structures of governance to replace the old, crumbling structures. In this world it is the Darwinian battle of winners and losers which shapes the future. There are Boom and busts in OECD, fast growth in LDC’s. In terms of values, there is no clear direction, Europe widens to numerous countries, and the party splits and strange coalitions. Niche players flourish in the airline industry, new players enter and exits thus shifting alliances and commodity market behavior. Scenario 2) New Structures. In "New Structures" shared values and new ways of organising are found which enable growth to continue in a manageable, rather than in a socially disruptive, way. Drivers include the market forces of competition and costs and need for flexibility. In this world there is a earch for order and stability, infrastructure investments, and long-term horizens. Europe grows strongly but there are setbacks in Asia and LDCs. Values are inner-directed. Euro-enthusiasts deepen the EU. Asia focuses on security. In the airline industry subsidies end in Europe, more European mergers, large, powerful distributors, huge environmental costs, airport constraints slow growth, HS trains and video-conferencing takes off.
Around the World – Collective Forethought: A New Paradigm in Strategy
Klaus Heinzelbecker and Adrian Taylor. Heinzelbecker headed the BASF AG Chemical Group, responsible for the management of the scenario project and the steering of different project teams.
The Chemical Advisory Group for Europe conducted a scenario workshop examining the external business driving forces for the scenarios. This included the regulatory burden in Europe compared to the rest of the world; relative costs of Europe vs. elsewhere in, e.g., labor, energy, and logistics; degree that globalization continues with regard to trade and investment; volatility and absolute levels of feedstock price; public perception of the industry's reputation and innovation. Drivers relative to the chemical industry include restructuring by scrapping inefficient plants and invest in better ones and innovation not just in products and processes but also business models. Scenario 1) Sunny: Bright Future Ahead. “In this scenario, the EU in 2015 has access to competitive feedstock, and there is strong demand from local converters that reduces the pressure on prices. The innovative climate, with support of the general public, encourages new technologies such as biotechnology, and the emergence of suppliers using new raw materials. Customers and important industries stay in Europe. Overall costs do not improve, but also do not get worse. The mostly positive external environment encourages the chemical industry collectively to do its homework, finding new business models and proactively restructuring. This, in turn, spurs investment in the EU market and provides a flow of qualified workers, who no longer come from the synthetic chemistry background alone. This emerges as a normative scenario, where win-win relations can be developed for governments, greens and industry if all play their cards right. Certainly, the hope must be that this will be taken up as the basis for discussion on how to move forward.” Scenario 2) Cloudy – Realistic Optimism. “The external environment is not as favorable, with geopoliticaltensions causing feedstock prices to rise and increasing their volatility.This situation is further aggravated by high energy priceswithin the EU, and decreased refinery capacity, both of which pushup production costs considerably. Europe faces extremely toughcompetition from Asian finished products and Middle Eastern intermediateproducts. However, the regulatory authorities in the EUrealize the problems, and give industry a helping hand in its restructuring,by supporting innovation and giving reasonable timedelays for implementing regulations. Thanks to the positive messagefrom the regulator, restructuring is undertaken whole-heartedlyacross the industry, with scrap and build taking place and specializationin niche markets. While there is a shortage of qualified labor,this is partly made up by bringing in qualified staff from developing countries.It is clear from this that, even faced with a threatening externalenvironment, there is hope if the authorities can be won over, and ifall Cefic member companies join forces to transform the industry.” Scenario 3) Rain – Be Prepared. “This scenario starts from a rather favorable external situation,where feedstock prices are reasonable, and there is bearable pressurefrom Asian competitors. Even if some client industry segmentsare leaving Europe, important clients remain active.However, the EU legislative machine is stuck in a "muddling throughmode" following enlargement, and is unable to steer policiesto reform, or indeed in any particular direction. The result is anincreasingly unclear regulatory situation, which damages businessconfidence. Lacking this lead, the chemical industry fails to get itsact together. Innovation is focused on short-term cost saving, restructuring is slow, and major investments flow to other parts of the world, leading to a brain drain, as top talent leaves in search of more dynamic horizons abroad. This scenario reinforces strongly the notion that the industry's fate lies in its own hands, too. A favorable outside world is not enough to guarantee success as, by failing to seize the opportunity given them, with each company thinking only for itself, problems ensue.” Scenario 4) Storm: Whom to Blame? “A threatening geopolitical situation is coupled with a deliberatesubsidy of feedstock in some producer regions combined and with aheavy and increasing legislative burden imposed by the EUauthorities that fails to replace national regulations, but rathercomes on top of them, with each country implementing EU laws ina different way. Even though Asia is not sucking in so much in investment, the problems of Europe are sufficiently large that few companies wish to build up local capacity there. Chemical companies therefore tend to cash-cow their EU assets, letting the productive resources age and decline. Innovation and innovators leave the European market, making it harder to recruit new talented human resources, even from outside the EU. This scenario is clearly a minatory tale of just how bad the picture could get in the absence of good will from all those involved.”
World Out of Balance – Three Scenarios for 2015. Adapted from the book, “World Out of Balance” by Paul A. Laudicina. Copyright 2005. McGraw Hill Education.
A.T. Kearney's Paul Laudicina offers three scenarios that depict possible visions of the global future. Based on five key drivers of change - globalization, demographics, consumption patterns, natural resources/environment and regulation/activism - the author envisions three possible and plausible scenarios for the ten-year global outlook. Scenario One: Castles and Moats. “In this darkly pessimistic (though not necessarily most-probable) scenario, the world in 2015 is plagued with instability. Terrorist groups have continued their campaign of well-coordinated attacks against the United States and its institutions abroad. They succeeded in eroding global confidence in what was once seen as the world's preeminent political and economic superpower. Although most of al Qaeda's leaders have been caught and killed, many questions are still unresolved. They include Palestinian statehood, ongoing conflicts in Central Asia and the Caucasus region, as well as worsening standards of living in Middle Eastern countries. Fortress world - As a result, among Western nations, national security trumps all other concerns. Civil liberties have taken a backseat to security concerns, as governments subject their citizens to constant surveillance. With xenophobia on the rise, immigrants, foreign workers and even ethnic minorities are viewed with suspicion. Fewer and fewer people are willing to travel, work or live abroad, knowing that they will be subjected to intense scrutiny. As a siege mentality sets in, rising nationalist and populist sentiment is the catalyst for heightened levels of economic protectionism. Governments now consider it a high priority to protect jobs and prevent them from going overseas. And barriers to foreign investment and cross-border travel ensure that countries can safeguard their own unique ways of life. Countries no longer believe in the efficacy of multilateral arrangements and prefer alliances with small groups of like-minded countries they feel they can trust.” Scenario Two: Patchwork World. “Let's now switch to another, less calamitous, view of the world of the future. The state of the world and the business environment is characterized by a muddle-through mentality. Few governments show much leadership or vision — or even have enough high-quality talent to try to do so. The corporate sector responds in kind. Companies seek growth and profits by working their relationships and looking for advantage wherever they can find it in a fairly chaotic and turbulent world. Large patches of the globe are mired in poverty and violence, although the good news for North America, Europe and Australasia is that much of the trouble is localized. It does not spill over excessively into the zones of affluence, though they would be getting even more affluent if global growth rates were higher. The United States and the expanded European Union prove to be more resilient than others, given their vast internal demand and relative self-sufficiency. Widening divide - However, trade barriers in export markets have a damaging impact on key industrial sectors in Japan, China and Southeast Asian nations, curtailing overall macroeconomic growth in these countries. Government aid and emergency financing grow more scarce, leaving the developing world to fend for itself, while the world's wealthiest consumers account for a greater share of global spending power than at any other time in modern history. Rise of the middle class - In advanced markets, these on-the-go consumers show a penchant for sophisticated, easy-to-use goods and services that simplify lifestyles and address personal needs. Meanwhile, middle-income spending shifts to emerging markets such as China, India, Mexico and Brazil. Collectively, roughly two billion people — 29% of the world population — form the basis of this growing middle class. However, purchases of cars and first homes are sluggish, owing to economic growth rates that are lower than expected. Despite the broad convergence in purchasing power, a truly global "middle class" consciousness fails to take hold. National governments find it increasingly difficult to regulate corporations, in part due to the mass exodus of talented senior policymakers seeking more lucrative careers in the private sector. State, Inc. - Confronted with tight budgets and growing obligations to care for their aging populations, governments turn to corporations to handle a number of formerly public sector services. These include technical training programs, law enforcement and healthcare. As corporations assume a more visible role in the public sphere, they become increasingly sensitive about how they are perceived by the general public. As government oversight declines, a broad coalition of activist groups step into the breach to enforce certain standards of corporate behavior.” Scenario Three: Open Borders, Lingering Fears. “The United States and China are the dominant economic, political and demographic players on the world scene — with large, robust markets that are highly intertwined, with muscular roles in the world that sometimes collide. This is a time of intense business activity and technological innovation, and the rising tide of affluence continues to lift living standards in countries open to the global economy, even as further trade liberalization remains gradual. In the richest markets, companies tap into new consumption patterns emphasizing high-end, lifestyle-enhancing products and services. Trade in services is booming, and secure digital connections allow far-flung, truly global production and distribution networks to emerge. Rising expectations, coupled with a demand for constant innovation, makes consumers less tolerant of products and services that are cumbersome to use and do not deliver on their promises.”
Russian Prospects – Political and Economic Scenarios. Kaare Stamer Andreasen, Master of Social Science in Geography and Eastern European Studies , Jakob Kelstrup, Master of Arts in Russian and Eastern European Studies. Copenhagen Institute for Futures Studies, March/July 2005.
Today’s Russia has widespread freedom, democracy, and growing affluence. Will that still be the case in 15 years? 15 years ago, the Soviet Union was a goliath of an inefficient system and injustice. How well can we imagine a Russia of the future? The authors encourage readers to develop their own conclusions. The scenarios are profiled to enable individual companies and organizations to understand consequences within each scenario that shows developments along the chosen uncertainty axes over time. These economic scenarios for Russia are based on two uncertainty axes: one axis concerns whether Russia moves towards a more centralized form of government or towards a more decentralized form of government. One concerns whether Russia evolves towards a market economy (free enterprise) or whether it evolves towards a planned economy. The other uncertainty axis concerns whether Russia’s economy becomes based on raw material production or whether it becomes a differentiated production and service economy.
Scenario 1)Russia has a Working Liberal Economic System. “The Russia of 2020 has a working liberal economic system, but it has failed to develop a differentiated production and service economy. The raw material-dominated industrial complex still constitutes a substantial part of the Russian economy. Russia is hence very sensitive to fluctuations in global raw materials prices. In times of global recession the Russian economy is weak and dependent, and in global boom periods the Russian economy booms. The purchase power of Russian consumers rises and falls almost synchronously with global raw materials prices. Market Economy at Half Steam. - Market forces control Russia’s economic and industrial development, but the country has failed to diversify its foreign and domestic investments and thus develop a more differentiated industrial structure. One of the reasons for this is that Russia still hasn’t modernized its investment laws and the entire bureaucratic and administrative organization sufficiently to encourage far more foreign investments over and above the big investments in the oil and gas sector. Although membership of WTO has helped improve conditions for foreign investments in the Russian economy, it is still subject to too much government interference with sensitive parts of the energy sector. But Russia is still the EU’s biggest trade partner and deeply integrated with the global market. Hampered Middle Class - The development of a strong middle class has been hampered by a lack of diversification of domestic industry. As a result, the development of a Russian middle class to carry Russia into the 21st Century and contribute to a strong economic growth is not much further along than it was 15 years ago. The Russian consumer society is geographically unevenly distributed. Unequal regional development and the lack of investments across sectors has given the economic growth centres in two or three regions in European Russia a greater selection of goods than the rest of the regions. There is steady migration from rural to urban areas, as the regions around Moscow and St. Petersburg still lag behind the growth centres. The labour market is riddled with moonlighting, and there is major unemployment outside the raw materials sector. In addition, there’s not the same flexibility concerning changes in occupation in Russia as there is in Western Europe. David vs. Goliath.- Russia is experiencing lopsided economic development; the resource-rich regions do much better than other regions. Some attempt is made at regional redistribution and balancing of economic resources, but Moscow, St. Petersburg, and the resource-rich regions do better than the rest. The central government keeps a tight rein on the regions to prevent the resource-rich regions from seceding. Most regions are quite far from being self- sufficient and have to participate in inter-regional division of labour. In Russia’s struggle between the centre and the periphery, the richest regions succeed at the expense of those with fewer resources, those that don’t have the economic clout to negotiate with Moscow for privileged status. Oil Sets the Agenda -The high oil prices and Russia’s sale of gas to the EU still provide a positive trade balance. Unfortunately, not enough of the profits from oil and gas have been reinvested in other sectors than the energy sector. The money contributes to a continued economic growth in Russia, but the Russian growth rates are relatively small compared to those of e.g. China and India.Large parts of the raw materials sector are under the control of multinational companies. The greatest foreign investments in Russia have been in the oil and gas sector. The latter is still partly state property. The pipeline network has been partially modernised, but the Russian government has refused to invest extraordinary capital. The export of gas to the EU is the biggest source of income for the Russian state. There has thus been little real improvement in the climate of investment, except for the mandated WTO regulations that Russia has had to introduce. The most mature part of the market is thus the raw materials sector, where we see a lot of business and a well-developed retail business in the economic growth areas. The economy is booming in the districts where the raw materials sector dominates. There’s little unemployment as most of the labour market here revolves around the raw material sector and its associated service jobs. WTO Has No Effects on Exports - Russia still imports large quantities of foreign goods. Due to the membership of WTO, Russia has been unable to protect or develop its domestic industry as much as it would have liked. The membership allows Russia to export more of its domestic production, but lack of investments on the domestic front has rendered the country dependent on imported goods. This dependence on imports combined with the poor selection of goods in the peripheral districts has led to comparatively high prices on consumer goods. The financial sector has experienced a boom in loans by Russian consumers, and the financial sector in turn has invested more in the private sector. The WTO membership has thus had a positive effect on the financial sector.”
Scenario 2) Russia Becomes a New Economic Superpower.In this scenario, Russia has grown into a heavyweight in the global economy by 2020. Russia contributes strongly to globalization and is clearly part of international business life. Many Russian companies are players on the global scene. The Russian economy is very dynamic and has many participants. The former economic structure dominated by the raw materials sector has been replaced by a more diversified economic and industrial structure. More and more small and medium-sized private companies crop up.Things are going well.The emergency measures that were introduced to the Russian economy after the turn of the Millennium, among them a stabilization fund to soak up oil revenues, has led to large foreign investments across the sectors. This in turn has led to noticeable modernization and economic growth in areas like physical infrastructure, telecommunication, and the service sector. Russia’s middle class has grown, and the country possesses a well-educated, motivated, flexible, and globally oriented workforce. Russia is growing steadily stronger in areas like research, innovation, and development. The country has a strong domestic production plus a great growth of export-oriented production. Business life is characterised by strong national and international competition. Many small and medium-sized businesses have appeared, and private enterprise flourishes as never before. The government is very anxious to create good conditions for entrepreneurs. Growing regions. The Russian market is mostly characterised by great competitiveness. Two manifestations of this are a great amount of production for the domestic market and gains made by big modern Russian retail chains at the expense of the international chains. Foreign retail chains were too hesitant about expanding their businesses in the Russian regions, and the Russian chains took advantage of that to exploit the ‘first mover’ initiative in these areas. As the purchasing power of Russian consumers has grown greater and greater, this strategy has enabled the local chains to report greater profits than foreign chains. Regional expansion of retail trade has caused the income and employment figures of big cities other than Moscow and St. Petersburg to grow too. The Volga region, the Urals, and the Southern and Eastern regions in particular show high growth rates. A typical market economy There thus is a lot of business-to-business trade going on. The black economy’s share of the Russian economy has grown smaller due to e.g. more transparent tax rules, increased encouragement for investments, and reduced government interference in economic activities. It is no longer as necessary for local and foreign investors alike to have good political and administrative connections in the Russian business world in order to do business as it was 10-15 years ago, another sign that Russia has become a typical self-regulating market economy. The implementation of a functioning legal system has been of great importance. A more differentiated production and service economy has generated greater international confidence in the Russian market. Hence, in 2020, far more investments are made in Russian business. At the turn of the millennium, foreign direct investments (FDI) in Russia lagged far behind investments in other emerging economies, like the Chinese and South East Asian economies, but by now they’ve reached a much higher level and are on a par with the Central and Eastern European nations in terms of per capita FDI. The confidence in the Russian market is a consequence of careful attention paid to long-term improvements to the investment climate. This attention has resulted in more transparent property rights and investment laws plus a greater transparency regarding official handling of investment cases. WTO shows the way Russia’s membership of WTO has forced it to improve the investment climate. Thanks to WTO, foreign investors perceive lessened risks associated with Russia’s business world, although there is still some way to go before reaching Western standards and corruption is still to be found in certain parts of the Russian business world. Russia experiences increasing foreign and domestic investments in the shape of portfolio investments and direct investments. Russia has a transparent market with international accounting standards. Many Russian companies are quoted on the international stock exchanges. Faith in the Russian market, combined with the global economic success of Russian companies, generates opportunities for global actors to make big money on the expanding Russian market. Various foreign and domestic investments have led to a gradual shift in the Russians’ choice of employment. Where the oil and gas sector used to generate the greatest income and contributed the biggest share of the GDP, in 2020, the workforce is spread more evenly across various sectors. Service jobs thus play a greater part in the economic growth. Prosperity and contentment. The Russian people are generally content with the way things are. The rising economic standard of living, the excellent prospects for the future and the many fine opportunities make for an optimistic and dynamic Russia. Globalization is perceived as something positive that, at the same time, can be used to reflect Russia’s unique qualities. People take pride in being Russian, and Russian culture is in focus. The prosperity also benefits Russia’s marginal districts. Geographical location is less important in a digital age. Remote villages in Eastern Siberia participate on equal terms in the international knowledge society. Since a growing part of production is intangible, all the Russian regions participate in the global production. There is a tendency towards economic dispersion in Russia. The Eastern regions turn more and more towards Asia, the Western regions towards Europe. However, this does not foster burgeoning separatist sentiments. Federated Russia is firmly embedded in regional political activities. The outlying regions contribute more and more to the Federal budget. Russia has achieved political maturity, and an efficient public administration provides an equal distribution of resources.
Scenario 3) 2nd World In this economic scenario, the Russia of 2020 is characterised by government interference with the economy. Not the same interference that was common during the Soviet era, but still with some of the same signs. The Russian economy is still based on raw materials, and only feeble developments have been made towards a more differentiated production and service economy. The Russian economy is growing very slowly, almost not at all. Russia’s business life is dominated by great oligopolies, and there are growing internal inequities and lopsided economic growth. Bureaucracy, political cronyism, and corruption are basic facts of life. Fettered market economy/signs of planned economy. The economic initiatives that were launched after Russia’s independence created a broad foundation designed to help the economy of all of Russia’s industrial sectors mature, but the process has been mired by Russia’s growing dependence on high global oil and gas prices. Russia has failed to reinvest the income from its oil in other sectors of the economy. As a result the country remains dependent on the raw materials sector. Gas and oil are thus the mainstays of economic growth. However, investments in the gas sector have been inadequate and parts of it have yet to be modernised. The Russian economy is becoming more and more planned; many of the former state companies that were privatised in the 1990s are back in government hands. The state has also taken over majority ownership of industries that were showing excellent growth rates, like telecommunication, oil, and finance. This is partly a product of protectionist measures by the Russian government and partly in consequence of the government’s desire to have powerful economic negotiation tools at its disposal. The effects can be seen in Russia’s relations with the outside world, such as cooperation with WTO and trade with e.g. the EU. Russia’s attempt at restructuring its economy towards a market economy has thus failed. Membership of WTO is still not in the cards, due to mounting protectionism. A powerful bureaucracy runs the public administration. The economic structure is hierarchical with the raw materials sector and the machinery of state on top, and on the bottom the less important production and service sectors, whose growth rates more or less depend on the fluctuating growth rate of the raw materials sector. The state of Russia’s market depends on the global economy, as the country has failed to attract enough foreign investments to develop a differentiated industrial structure. More CIS, less EU. Because of its vulnerability, Russia regularly imposes trade restrictions on trade partners like the EU and China. The trade partners retaliate, and the result is ongoing trade disputes. So Russia has turned its gaze towards the CIS countries. Cooperation in the CIS has received a new lease of life because several of the member states see advantages from closer economic cooperation. Russia’s neighbours in the CIS area experience the same sort of fluctuating growth rates as Russia and likewise have trouble becoming truly integrated in the global economy. The only exception is Ukraine, whose independent economic profile is moving it closer to the EU; as a result, the country is attracting large foreign investments. Poor climate for entrepreneurs. The hopes from the start of the 2000s for development of a big middle class in Russia have not come true. The inequalities between different classes of Russian society have become worse. Unemployment is high, and the funds allocated to education and research are inadequate. There’s no demand for well-educated employees outside the raw materials sector and the administration. Conditions within the service and production sectors are bad, and the climate for entrepreneurs is poor. Even though Russia needs well-educated workers, it can’t offer them decent salaries or the degree of modernization that would be needed for their further development. Hence there is a relatively large amount of brain drain as well-educated people seek employment abroad. Barter and black economy Russia is experiencing great regional inequalities. Some of the nation’s 89 regions and peoples were not included in the economic plans and only serve as extraction areas for raw materials. Hence barter is growing more and more prevalent in these areas, and the black economy looms large in the economically marginal regions. For this reason, official economic statistics do not give a true picture of the development of the Russian society.As regards infrastructure, Russia is still lagging behind the goals that were formulated at the start of the millennium and compared to the expectations held by many prognoses. Russia has failed to develop its transport and distribution system adequately because the expected foreign investments failed to appear and because there have been no reinvestments outside the raw materials sector. At the same time, Russia has failed to attract the amount of foreign capital that had been expected to its retail sector. Foreign retail chains have withdrawn from the country because of an unstable investment climate and impenetrable legislation, particularly in the field of ownership law. Inertia and bureaucracy Russia has not been able to keep up with the economic growth rates of the richest countries and looks more and more like a second-world country. Russia’s labour market is characterised by a wage-earner culture. There are no encouragements and no opportunities for social advancement. The state’s interference with and regulation of the economy has created an efficient, but rigid bureaucracy. The many rules and courts hinder the activities of entrepreneurs. Business advisors find it necessary to be able to offer customers access to strong personal networks linked to authorities and trade.
4th Economic Scenario: New Soviet It’s Russia in the year 2020. Russia has developed a differentiated production and service economy and its dependency on raw materials has eased. There is considerable government interference with the economy. This interference has resulted in massive economic planning, and several sectors are protected by tariff walls, subsidies, and other government measures. Russia is trying out an industrialization strategy based on import-substituting industrialization in order to achieve complete independence. The goal is to create a combination of import-substituting industrialization and export-oriented industrialization. However, the attempt is not succeeding too well, and Russia is at a crossroad between protectionism and dependency on imports. Economic growth but no international competitiveness Russia has grasped the necessity of reinvesting oil incomes from the stabilization fund in other sectors than the raw materials sector, so the service sector and small and medium-sized businesses show high growth rates. On the surface Russia thus has a differentiated production and service economy. However, the state frequently takes control of formerly privatised companies, especially in the oil sector, telecommunication, and the dairy sector. Not because these companies are failing, but because of state interference and tax policies.Although developments have been more along the lines towards a differentiated economy, there’s still not a sound differentiated economic structure in place; local products are seldom competitive on the global market thanks to increasing protectionism and erection of tariff barriers.Russia makes considerable use of domestic investments, including domestic entrepreneurs, who have become numerous. However, the result is a more inward-turning Russian production cycle that is more suited to domestic markets than to the global market. The result is that Russia still has a big demand for foreign goods and can only show a small positive trade balance. Corruption is alive and well The regions have become better integrated with the overall economic development. As a result, foreign investments are more distributed among the regions and don’t just wind up in the big growth areas round 3-4 cities. The competition among regions is becoming fiercer and fiercer. A region’s effectiveness depends on political contacts and the state bureaucracy. The Soviet legacy of corruption and bureaucracy of the public sector is still with us. WTO accommodations Russia is not a member of WTO, but it has still had to adjust its economic development according to WTO regulations. Although the country is self-sufficient with most products, a big demand for certain foreign products and industrial spare parts makes it necessary to trade with the outside world. That’s why the EU is still a major trade partner of Russia, in spite of protectionist measures such as import quotas and trade barriers being frequent features of this commercial relationship. Russia hasn’t got had the foreign investments it needed to strengthen domestic production and make Russian goods dominant on the global market. Instead it has used oil revenues to reinvest in domestic production, which has created an economically differentiated, not internationally sound industrial infrastructure. Joint ventures are the most important and most frequent form of foreign investment. The central authorities encourages joint ventures, but they’re still not particularly attractive to foreign investors, since investors have very little influence on the running of the business. A flexible currency Russia’s planned economy leads to a centrally fixed currency that goes up and down according to how it will aid Russian exports. So when economic growth lags behind, the currency is lowered to make it easier to sell goods on the global market, while in boom times the currency is raised to protect domestic production. This makes Russia a less attractive country for foreign investors. The laws are unclear and sometimes hostile to investors from abroad.Regionalization, internationalization, and centralization. The close ties between the individual regions have served to modernise infrastructure and distribution network. There are still parts of Russia that has not benefited from this development, though: the most remote areas, where raw materials extraction is of great importance, but where not enough resources have been allocated to modernise the distribution solutions and warehousing facilities of retail chains. As a result, you can find a few regions that cooperate closely with neighbouring regions and constitute small business enclaves with political contacts to the state as important assets.Russian exports are hampered by not being a member of WTO. Consumer goods are primarily exported to the CIS countries and to 3rd world countries. Furthermore, exports are still dominated by raw materials whose global prices still influence the degree of economic growth in Russia. Russia is experiencing a small, but by no means insignificant, market in connection with Business-Business, as the central decision-making processes frequently make themselves felt in the business world, both on the regional and the national level. The Business-Consumer market is relatively small for foreign businesses because domestic businesses cover all areas and get preferential treatment. Business-Government is in many cases vital and cover political contacts plus contacts to the regional and federal bureaucracies.
The Shell Global Scenarios to 2025 The Future Business Environment: Trends, Trade-offs and Choices © Shell International Limited (SIL), 2005.
The reader is encouraged to refer to the 2001 Shell Global Scenarios (including the scenarios that were developed over a thirty year history of the Shell scenario project), for an apt and coherent background leading up to the 2005 work. In the 2001 scenarios, Shell presented two global scenarios that explored the challenges of a globalizing, deregulated, market-centric world. Today, the tensions captured in 2001 remain valid, but societies also face more complex choices on the nature of regulation, the framework for corporate governance, and welfare reforms. The key questions asked in 2001 were, “Will the resolution of dilemmas arising from globalization be dominated by global elites or by the people of the heartlands?” In 2001, the “Business Class” and “Prism” scenarios highlighted the “connections that matter” and “multiple modernities”. The 2005 Shell scenarios continues the work of 2001 and uses a metaphore for air navigation to show a charter of routes across three interrelated levels:1) the Jet Stream level of long-term, predetermined trends, uncertainties, and forces; 2) the Weather Systems level that reflect key regions as influenced by the Jet Stream context; and, 3) the Market-level of trends and turbulences. Part I of the 2005 Shell Scenarios present a “Trilema Triangle,”which is a unique analytical framework developed to map relations between market participants, civil society and states. Part II presents the scenarios themselves. Part III provides an analysis of critical trends common to all of the scenarios, starting with the international scene (emphasizing the US, China, the EU, Africa, and India), then matters of demography and patterns of economic growth. Part III concludes with a study on energy security and the move toward an energy and carbon industry. Key differences between the three scenarios are captured in Trilemmaps which compare specific features of Shell’s business environment that capture key dimensions. The following are scenario abstracts of Part II’s completed versions of the Shell Global Scenarios to 2025: Scenario 1) Low Trust Globalization: A Legalistic Prove it to me World: “The absence of market solutions to the crisis of security and trust , rapid regulatory change, overlapping jurisdictions, and conflicting laws lead to intrusive checks and controls, encouraging short-term portfolio optimisation and vertical integration. Institutional discontinuities limit cross-border economic integration. Complying with fast-evolving rules and managing complex risks are key challenges.” Scenario 2) Open Doors: A Progmatic, “Know Me” World: “Built-In” security and compliance certification, regulatory harmonization, mutual recognition, independent media, voluntary best-practice codes, and close links between investors and civil society encourages cross-border integration and virtual value chains. Networking skills and superior reputation management are essential.” Scenario 3) Flags: A Dogmatic, “Follow Me” World: “Zero-sum games, dogmatic approaches, regulatory fragmentation, and national preferences, conflicts over values and religion give insiders an advantage and put a brake on globalization. Gated communities, patronage and national standards exacerbate fragmentation, and call for careful country-risk management.”
Fleeting Equality: The Relative Size of the U.S. and EU Economies in 2020. U.S. - Europe Analysis Series. Adam S. Posen, Senior Fellow, Institute for International Economics, The Brookings Institution, Washington, DC.
In May, the European Union celebrated the accession of 10 new members. In one fell swoop, by adding their combined GDP to that of the current EU-15, Europe had finally caught up to the United States in economic size. Both economies at present have an annual income of around $11 trillion. Their per capita incomes differ significantly, with the European Union spreading the same income over 170 million more people. Nonetheless, for symbolic as well as practical reasons, the achievement of parity between the EU and U.S. economies marks a milestone.2 This parity, however, is not going to last. Given differentials in demographics (both fertility and immigration rates) and in productivity growth that will persist for the foreseeable future, American economic growth will outstrip European growth. Absent some change in current trends, the U.S. economy will be nearly 20% bigger than the enlarged European economy in 2020. This analysis paper projects the relative sizes of the U.S., the expanded EU, and the “rest of the world” [RoW] economies out to 2020 under three scenarios—and even under the one most favorable to Europe, parity will not be maintained. Adam S. Posen
Three scenarios are considered. Scenario 1) Baseline: “The United States, enlarged European Union, and RoW, are all assumed to grow at their annual average growth rates of 1993-2003. In this case, the U.S. share of global GDP is essentially unchanged by 2020, the EU share declines by over 3%, and the RoW adds 4%. The U.S. economy more than doubles in size to $24.6 trillion, while the EU economy goes from parity with the U.S. economy in 2003 to $20.9 trillion (15% smaller than the United States) by 2020.” Scenario 2) Demographic Determinism: “The U.S. growth rate is assumed to slow down by 0.02% each year due to declining birth rates, in part due to improved income of Hispanic- and African-Americans. The EU growth rate slows down by 0.07% each year due to rapid aging of the population, which is if anything exacerbated by the accession countries. Part of the growth decline comes from the effect of aging on government budgets, and on productivity growth of meeting those budgets through increases in interest rates and distortionary taxes, with the rest coming directly through shrinkage of the labor force. The U.S. share of world GDP declines slightly by 2020, remaining just above 20%; the enlarged EU share of world GDP declines by 5% (overall global GDP grows noticeably but not disastrously more slowly than in the baseline scenario). The relative gap between the U.S. and the EU economies in 2020 is wider than in the baseline scenario, with the U.S. national income worth $24.0 trillion, and the EU economy $19.1 trillion (a 20% difference).” Scenario 3) European Reform: “The U.S. is assumed to continue to grow at its average rate of 1993-2003, but the EU growth rate is assumed to jump by 0.5% in 2008, stay that amount higher, and gain a further 0.05% a year through 2020. Under this scenario, in 2020, the EU growth rate would catch up with that of the United States. The rationale for such a scenario is that productivity is boosted from integration of the accession countries’ low-wage labor forces or the results of a number of domestic reform efforts in core European economies following the upcoming election cycles. It is assumed that these benefits take a few years to be felt, but with ongoing beneficial effects. In this scenario, the U.S. and EU shares of world output decline at a slower but still noticeable pace by 2020 (the EU share from 21.3% to 18.6%; the U.S. share from 21.1% to 20.0%). The size of the EU relative to the U.S. economy goes up compared to the baseline scenario, reaching 93% of the U.S. size in 2020. These scenarios all likely overestimate the relative size of growth of the RoW, including that of China and India, for two reasons. First, by measuring the economies in PPP terms, rather than in traded goods terms at multi-year average exchange rates, the scenarios tend to increase the size of developing countries’ output relative to that of developed economies. PPP calculations, in their effort to better account for the value of non-tradeables, even in very low wage economies, effectively assume that producing a $1 haircut generates as much purchasing power for the economy as producing $1 worth of high-tech equipment for export. In fact, the high U.S. and EU share of cutting-edge technology production (relative to their share of the world economy) and their ability to borrow on world markets in their own currencies (given the greater liquid assets available to them) means they control a greater share of global income than PPP calculations of world GDP shares imply. Secondly, despite the Asian financial crisis and the travails of certain countries in recent years, the last 10 years have been years of relatively good growth in the major emerging market economies, and projecting out their ongoing growth at the average rate of the last 10 years is on the optimistic end of things (though certainly not unreasonable). This would be particularly the case for China and India, both of which have undergone unprecedented growth spurts of late that may not be sustainable indefinitely. Thus, the scenarios give a lower bound for the U.S. and EU share of the world economy. These scenarios also likely underestimate the relative performance of the U.S. economy versus the EU going forward (barring reform) as well.”
Global Normative Scenario to the Year 2050 Jerry Glenn and Theodore Gordon. Published in the 1999 State of the Future Report: Challenges We Face at the Millennium. This was sketched previously in the 1998 Report details have been added using 1998-99 year's and earlier Lookout Panel responses. as well as other sources of information.
Although the following may look like three alternative normative scenarios, they are intended to be one scenario with three interdependent themes. Each theme represents a different perspective on how change occurs. Some believe technology is the key force that has made change occur. Others argue that changing consciousness and the human capacity is more fundamental to long-term systemic change. Still others say that political and economic policies create the conditions for changes in both technology and human capacity. The following global normative scenario assumes that all three themes are important to the realization of the normative future of 2050.
Normative scenarios represent desirable future worlds. They employ credible cause, effect and feedback relationships to get from the present to a desirable future.
Scenario: A Normative World in 2050: “By 2050 the world had finally achieved a global economy that appears to be environmentally sustainable while providing nearly all people with the basic necessities of life and the majority with a comfortable living. The resulting social stability has created a world in relative peace, exploring possible futures for the second half of the 21st century. Different explanations have been given for the series of astounding successes achieved by 2050. Some believe that breakthroughs in science and technology were the keys, others that development of the human potential was more fundamental, and still others that political and economic polices made the difference. All three themes were important and mutually reinforcing.” Technological theme: Internet has become a right of citizenship. Businesses give free accounts to all customers; employers give them as an employee benefit. The connection of virtually all people to the global information and communications systems accelerated the pace of scientific research and the introduction and diffusion of new technology. Biotechnology, nanotechnology, and closed-environment agriculture fed the world. New and improved sources of energy made cleaner economic growth. Brain-like intelligent systems used neural networks to augment human intelligence and improve decision making. Molecular manufacturing (nanotechnology) lowered manufacturing unit cost, requiring less volume of materials and energy usage, and hence, lowered the environmental impact of a population that had almost reached 10 billion. Vaccinology and genetic engineering eliminated most acquired and inherited diseases further reducing the need for more frequent pregnancies to have a similar sized family. This was a factor in further lowering fertility rates, even though generational mini-booms have continued from the great population explosion in the mid-20th century. Cyberspace had become a major medium of civilization creating a constantly growing, non zero-sum economy and had changed day-to-day life as significantly as the industrial revolution had changed life 200 years earlier. The success of the International Space Station had led to other orbital habitats, the lunar base, and the pioneer communities on Mars. Nearly 250,000 people now work in space communities in orbit, on the moon, and on Mars, giving a new frontier for human imagination and advances in civilization. Breakthroughs in the unified theory of matter and energy have led to a deeper understanding of mass, inertia, gravity and quantum behavior. Health is a widely accepted human right; equity in coverage and accessibility to quality health services and health information exist regardless of capacity to pay, culture, race, geographic location or social ascription. Tele-health and tele-medicine is widely available and easily accessible. Health care providers adopt new paradigms to forecast and prevent potential health problems through personal and public health approaches; early detection through biomonitoring and management of problems that do occur. The invention of secure electronic money revolutionized retail transactions, international trade, and provided extraordinary growth of employment. The synergy of telematics and micro-genetics provided a jump in human evolution eliminating many diseases and increasing human capabilities. Biotechnology has created high yield plant species that are disease and pest-resistant, use less fertilizer and are more tolerant of drought and brackish water. The mapping of bacterial, human, and plant genomes, provided knowledge of genetic processes and to some extent, information about how to control them. The World Energy Organization, created in the early 21st century, coordinated research and helped improve policy leading to today’s safer mix of sources that have reversed the greenhouse effect. Space-related inventions have created new industries, tax sources for social programs, improved living standards, expanded access to tools by miniaturization and production processes that have lowered the costs of many technologies from satellite communications to medical diagnostic techniques. Income from satellite communications, solar power satellites, orbital energy relay satellites (orbital electricity grid), lunar and asteroid mining, weightless manufacturing, and space tourism has led to an enormous growth of private sector ventures in space. This acceleration of the privatization of space applications has avoided the public cycles of interest and disinterest in space support, so common in the last century. Despite the technological progress and scientific insight in which today’s society is based, most scientists and engineers believe that there is still more to come, that the future holds further excitement, progress and discovery.” Human Development Theme: “The acknowledgment that education was the solution to many problems and that the knowledge economy was spreading rapidly, stimulated governments and corporations worldwide to increase their investments in education, training, and applications of cognitive science. The race to educate the world began after the World Summit on Cognitive Development in 2010. Most institutions that had even a peripheral association with education began debating the most equitable and cost/effective ways to make everyone knowledgeable, virtuous, and intelligent. Internet access became a right of citizenship. Educational software was imbedded into nearly everything that could hold a computer chip. The World Cyber Games permeating daily life blending entertainment and education. The transition from a mostly illiterate global population to a mostly educated world was achieved by the mid-2040s. The interconnection of many separate programs into a global system of education created a cyberspace in which all could get the best education at their own pace, learning style, and in their own language. In addition to the vast improvements in educational technology, the content of conventional public education also changed during the early 21st century. Education successfully linked human ecology to decision-making in an increasingly global society. Advances in cybernetics and human cognitive development increased the use of machine intelligence to augment human intelligence, while emphasizing social and emotional development for improved decisionmaking. In short, it became fashionable to be intelligent and virtuous.It was not enough to learn and understand the history and current status of an item; in the world of 2050 an educated person also knew a range of possible futures for that item. The millennium provided the focus to foster collaboration among the various inter-religious dialogues on human values and morals that continued over several decades and through all forms of media. Although cultural and religious conflicts will still need more time to fully disappear, these new initiatives have help to keep them in sufficient check to prevent the kinds of wars so prevalent in the last century. Changes in global frames of reference and philosophies due in part to understanding of the interaction of population and economic growth with environmental degradation gave rise to the more enlightened age of today. The merger of the environmental movements and human rights groups in collaboration with many leading multinational corporations made possible the global educational campaign that made clean air, water, and land to be accepted as a human right. As a result, many changes in environmental policies and behaviors have been made. It became unthinkable to establish an environmentally dangerous project. With global consciousness (awareness that everyone is aware of the world as-a-whole) institutional forms continuously reinvented themselves. Few hierarchical or network institutions existed in a continuous sense as in the 20th century. Instead they became fields for collaborative actions of varying time duration. Every four years the Olympic movement re-enforced this consciousness through its games in both cyber and three-dimensional space. In 2040, when the Mars Pioneers won the first Olympic competition in solar sailing between earth and lunar orbit, humanity seemed to pass some threshold of consciousness. We became aware that we were no longer an earth-only species but will become a space faring one. Our human capacity is just now beginning to be understood. The current debate about a possible signal from extraterrestrial intelligence is revolutionizing our values, philosophy, and views of the human potential as we enter the second half of the 21st century.” Political Economic Policy Theme: “The number of wars decreased as democracies and respect for cultural diversity increased in the early 21st century. Although old cultural conflict wounds of the past still flare occasionally, we can successfully avert and prevent them for growing into larger conflicts. The resulting social stability nurtured economic growth and created 2 billion people in the global middle class by 2010. This increased conditions for further stability and sustainable growth that moved over 5 billion people in the middle class by 2050. The transition from dictatorships to democracies is now complete. Authoritarian regimes cooperated in the transition realizing that democratic processes were increasingly necessary for social stability and the generation of wealth en par with global norms. Improved information technology helped make UN Electoral Units instrumental in this transition by providing effective election design, management, and monitoring. Threats to make development assistance and loans from international organizations dependent on progress toward democracy sometimes proved counterproductive. The incentive of participation in the Global Partnership for Development (GPD) proved effective as a partnership between high income countries and those with less industrial and entrepreneurial cultures to improve economic development. GDP membership required respect for human rights and policies to address environmental security. If they were abridged or thwarted sufficiently, intervention by UN peacekeeping forces could be authorized by the Security Council. A little noticed article in the GPD called for acceptance of periodic NGO assessments of progress on democratization and the reduction of corruption. The corruption reports have become an annually anticipated event and have proven to be an effective instrument through which countries have reduced corruption. As the world progressed toward peace, the reduction in arms R&D, production, stockpiling, trade, and military personnel was accelerated along with the efforts to convert military technology to civilian uses. The World Sustainable-development Organization (WSO) was created to provide a global focus for business, government, and individual efforts to invest into sustainable development. The International Court of Environmental Arbitration and Conciliation has become the key instrument for advising the UN Security Council on environmental security actions. UN Peacekeeping forces were deployed when the ICEAC ruled against a state that was unwilling to stop the leakage of nuclear waste that endangered several countries. Since then the threat of UN military intervention has been sufficient to cause remedial actions. Intergenerational equity has become a major global value and legal principle. Similarly, there are now government incentives for smaller and healthier families, effective long-term contraceptives, low infant mortality rates. Since family planning or spacing has become acceptable in nearly all cultures, it is unlikely that birth rates will increase in the near future. Birth rates have fallen sufficiently that now more people worry about sufficient population growth to the support the world’s increasingly aging population. The synergies among the successes in political economic policies, human development, and technology have resulted in a better world in 2050 that few at the turn of the century believed was possible.”
In the New Financial Cosmos, it Will be Safer to Take a Dare. Robert J Shiller, Yale University economist and author of “Macro Markets: Creating Institutions for Managing Society's Largest Economic Risks.” Peter Coy, senior writer, Business Week.
In the future, the idea of risk takes on a whole new meaning because in the 21st Century, we see that innovation and creativity are considered high priority values. Our values have changed from hard work to innovation; innovation on every level of the workforce. Thus, the need to hedge risks on careers. Skiller describes an interesting scenario in the year 2015: In the New Financial Cosmos, it Will be Safer to Take a Dare. “Imagine a market in 2015 where hedgers and speculators meet to trade futures, similar to today's betting on the value of corn or soybeans. The wagering will concern the future value of a career, a neighborhood, or even a country. If the risk of a stick-your-neck-out choice is hedged, it's suddenly a whole lot easier to take the plunge Think of the invisible losses that society suffers because of fear of failure: the brilliant careers that are never attempted, the great companies that are never launched, the products that are never produced. Society won't eradicate fear of failure in the 21st century. But it will do the next best thing: It will devise new kinds of financial instruments--new hedges--that will reduce the riskiness of new ventures. By so doing, it will embolden a new generation of smart but cautious entrepreneurs to pursue their dreams. All of us will benefit from the creativity this will unleash. The new financial instruments won't protect people from their own stupid mistakes. Instead, these hedges will insulate people from events outside their control that could affect their chosen careers, industries, or even countries. That will make people more the masters of their own fates. Career hedges are just one example of this broader application of risk-buffering by 2015. By 2015, it is also possible to hedge against a decline in the value of houses in one’s area. People might be more willing to spruce up their homes or buy houses in chancier neighborhoods if they could protect themselves against a slide in the local market. Amazingly, by 2015, it is possible for governments to create a financial instrument to hedge on national economic performance. By 2015, an Argentine receives a payoff if Argentina's economy hit the skids. That might encourage bright people to build a life in Argentina rather than emigrating. Hedging a career, a neighborhood, or a country may sound exotic. But consider the risks of the 21st century. It makes sense not to put all eggs in one basket.”
Future of Management. John Jordan, director of electronic commerce at Ernst & Young's Center for Business Innovation. Warren Bennis & Patricia Biedeman co-author of “Organizing Genius” Persius Books, 1998. ISBN 0-201-57051-3. Warren Bennis, Distinguished Professor of Business Administration at the University of Southern California, is a well-known authority on leadership. He is the author of Leaders and On Becoming a Leader. He has served as a consultant to many large companies.
Patricia Ward Biederman is a staff writer with Los Angeles Times. Her writing focuses on cultural affairs.
Already, many companies are adopting work groups with no designated leader. In 1987, 28% of the largest 1,000 public companies boasted at least some self-directed groups. By 1996, 78% had some, according to research by Edward E. Lawlor III, head of USC's Center for Effective Organizations. The trend will only intensify as a generation of team-oriented managers climbs higher. Says Lawlor: ``I can see future generations of people getting to the top with more team experience--and being more willing to use it once they get there.''
Jordan describes a scenario in the 21st Century: The Global Corporation Becomes the Leaderless Corporation: “None of us is as smart as all of us.” “By 2020, the trailblazing corporate superstar becomes a thing of the past. Follow the-leader is a game companies will no longer play. The corporate path to success by 2020 is paved by teams made up of the best and the brightest, with their egos checked at the door. Successful companies are leaderless companies. Or, to be more precise, companies whose leadership is so widely shared that they resemble beehives, ant colonies, or schools of fish. In 2004, democratic decision-making in corporations was confined largely to factory floors and new-product laboratories, far from the top of organizational pyramids. But through trial, companies found that democracy had to extend upward toward the top of the pyramid. The lesson of history learned in the 20th century: the collapse of the Soviet Union because its command-and-control economy couldn't keep up with the West's free market. In the 21st century, the same fate will befall companies whose CEOs attempt to control everything. In a world that is becoming ever more chaotic and dependent on brainpower, teams at the top make more sense. By 2020, the outrageously paid CEO who sits behind a ``buck stops here'' plaque will rarely be seen or heard of. By 2020, the Internet will allow companies to be more like beehives because information can be shared horizontally rather than funneled up to the CEO's office and back down again. ``The nature of the process that built the Internet will inform everything that touches it. There's nobody in charge,'' says John Jordan, director of electronic commerce at Ernst & Young's Center for Business Innovation. In 2004, succeeding was like climbing the Rocky Mountains. It wasn't easy, but the path was obvious. Success was a matter of executing on a well-established business plan: Every step up brought you closer to the top. In 2020, it turns out that the Rocky Mountains are fluid and moving,'' ``One minute you're at the top, next you're in a valley.'' Team leadership is ideally suited for this new reality. When the landscape is changing daily, it's crucial to react fast--something bureaucratic, top-down organizations don't do well.”
Scenario of the Global Economy: Pivitol Change to 2010. Organization for Economic CO-Operation and Development. The OECD groups 30 member countries sharing a commitment to democratic government and the market economy. With active relationships with some 70 other countries, NGOs and civil society, it has a global reach. Best known for its publication and its statistics, its work covers economic and social issues from macroeconomics, to trade, education, development and science and innovation.
Scenario of the Global Economy: Pivitol Change to 2010. “The development and spread of team-oriented institutional forms was slow and, in fact, little-noted at the time. What drew much more attention was the gradual and then return to economic prosperity. This began as a US revival, created chiefly as former excesses were finally sweated out of the system. The technology sectors had also grown away from over-capacity and were, by the beginning of the recovery period, were beginning to harness the breathtaking technologies that the previous decade had created. The biotechnology boom began, enabled by legislative and opinion-forming structures which had evolved explicitly to handle issues of trust. The onset of the second business cycle upturn of the millennium, in 2007-8, showed what became a lasting, if gradual and regional capital market revival. This showed what could be done, and the machinery of economic and social growth began to spread in the industrial and the industrialising world. Plainly, some of the worst-afflicted nations were unable to take full advantage of this, and these formed the core of a reactive nucleus which we shall meet again.”
“This resumption of growth is now seen to have been a pivotal point in the past quarter century of social and economic development. It is worth pausing to review the state of play within the industrial nations of the period. A very new approach to public governance now characterised the economically and socially dynamic parts of the world, being right-sized, consultative, evidence-driven, often specialised, multi-layered and innately networked. One earned a political voice less by being elected as a representative than by being available, interesting and generally regarded as useful in decision-taking.”
“This mode of operation was set against the traditional machinery that was (and is) still in place in nations where economic dynamism has been replaced by energetic squabbles over claimancy. As one commentator on Germany has remarked, the period was marked by fury over slicing cakes rather than energy in baking them. The majority of individuals who declared policy activism as their chief civic engagement in the 2010 EU census were over seventy years of age. Similar surveys in Japan showed that only a few percent of the population saw themselves as politically engaged, whilst almost all respondents over 60 were members of a claimants union.”
“These differences were the source of considerable friction. European, and to a lesser extent, Japanese interests tended to interpret their problems as stemming from the actions of others, notably of the more competitive economies. Their weak position greatly influenced the way in which they wished the world and its rules to evolve. Mercantilist measures that protected domestic markets were initially favoured as socially-responsible steps to reduce "globalization". In fact, most penalised the trade from poorer nations, or blocked measures that would forward domestic productivity. Whilst tariffs were generally deprecated, regulations that set unreachable standards (of cleanliness, of ethical standards, of industrial health and safety) effectively barred markets. Diffuse international supply chains were subject to sharp controls. Later, as elderly populations began to react against fast change as a thing in itself, sources of modernity were themselves addressed: the biology industries, self-aware software, direct experience media and aspects of nanotechnology were all widely banned goods during the 2010-15 period. Concerns about 'cultural pollution' were given extreme prominence, at least in some few nations where populism had reached for a retroactive sense of common identity. Friction between these counties - where industrialised or no, secular or theocratic - and the leaders of economic and social modernisation also became pronounced between 2012-15.”
“The sharp distinctions in style between the various tendencies in the wealthy world had forced a formalism into international relations. The tendency to negotiate clear positions, and to see these as both important and binding, brought a new strength to international law. The nature of this binding was a mutual set of sanctions, and an agreement to small multilateral sacrifices in order to avoid these. Agencies such as the WTO acted to systematise these agreements, but did not of themselves have any power. Discipline came from fear of what followed failure. This was to have a profound effect on how the world evolved after 2010.”
E-Business Pulse: Got Your Crystal Ball? Barbara Gomolski is a research director at Gartner Group, a research firm in Stamford, Conn. InfoWorld. 10-15-2001.
The question on everyone’s mind these days seems to be, “What's going to happen to the economy, and what will be the impact on IT and e-business over the next ten to twenty years?" Nobody knows. For IT professionals, these are uncertain times. On the one hand, there is a significant and renewed focus on disaster recovery and business continuance. On the other hand, there are tight controls on discretionary spending and great reluctance to start long-term projects.
Barbara Gomolski discusses three scenarios of the 21st Century: E-Business Pulse: Got Your Crystal Ball? “In 2005, let us consider three possible scenarios of the future of e-business and what they would mean for IT. More important than "getting it right" in terms of which of these scenarios materializes is knowing the tell-tale signs of each case, and being able to adapt to the changing conditions.” Scenario 1) Everything's Coming up Roses. “The most optimistic scenario would be characterized by the speedy destruction of Osama bin Laden's terrorist network, recovery of the global financial markets by 2005, and a significant rebound in the IT industry. If this happens, companies will gradually begin to rebuild their work forces and refocus again on growth strategies, such as e-business. Under this scenario, companies aggressively pursue applications such as CRM and b-to-b by 2005.” Scenario 2) The Good, the Bad, and the Ugly. Under this scenario, which I believe is the most probable, the United States and its allies make slow but steady progress in the war against terrorism, and the global financial rebound is equally sluggish. In this environment, we don't see businesses return to "growth strategies" until 2005 Until then, IT capital spending and staffing levels are held tight (pre-2001 levels), and companies retrench around core systems and existing customers. E-business is in a relative holding pattern, although Web-based collaboration systems and e-learning get a boost due to companies desire to halt travel. Scenario 3) Brother, Can you Spare a Dime?The bleakest scenario would be characterized by more large-scale terrorist attacks both in the United States and abroad, massive layoffs, weak corporate earnings, bank failures, and widespread bankruptcies in the IT sectors. This doom-and-gloom picture would mean that companies retreat to a defensive strategy by shedding all noncore businesses as well as big chunks of their work forces. In this environment, security and business continuance would represent a major thrust for IT, and emerging technology research around smart cards and user authentication would be on the front burner. Nobody knows what the future holds for the economy, in IT or e-business. But mapping likely scenarios and continuously scanning for indicators is something we need to do. Only then will we be able to respond to the inevitable changes.”
In Search of the New Economy: Encouraging Private Competitors to Fill the Demand for Skills. The Futures Project: Policy for Higher Education in a Changing World, Brown University, February 2001. From website: www.futuresproject.org
This future scenario explores the global challenges coming to higher education and describes various operational models: publicly funded institutions, privately operated institutions, and virtual universities.
The scenario is set in the fictional country of Globalya. Globalya, like many countries around the world is trying to address the growing chasm between the great numbers of students seeking and prepared for higher education, and Globalya’s limited capacity to enroll those students. Seeing opportunity due to Globalya’s inability to meet demand, private interests and institutions are coming into the Globalya and Globalya is experiencing a surge in the number of private higher educational institutions.
Overall, twelve new institutions have applied for authorization for operations in Globalya. Six are for profit enterprises; two are non-profits founded by individual philanthropists; one is a non-profit sponsored by a local company; and three are branches of foreign institutions. An initiative is also begun by the government for the Globalya Virtual University (GVU).
Budget problems in the country result in a 10% budget cut for the public universities. Faculty and students are becoming increasingly frustrated with having to do more and more with less and less. Plans for the GVU are scrapped, even after two years of development. Meanwhile, the cache of having a degree by foreign universities brings students to their doors; state universities are feeling deserted by constituents.
International Trade and the Doha Development Agenda.
Authors: Michael Garrett, Ian Goldin, and Dani Redrik in collaboration with the World Economic Forum, January 29,2003 http://worldbank.org
In this document, the authors set forth four possible scenarios for the WTO’s Doha development agenda.
Best Case Scenario: “A successful agreement results in substantial multilateral tariff reductions. Agricultural export subsidies are sharply reduced and strong disciplines place on domestic market insulation and distorting market support. Textile and clothing quotas are eliminated.
Increased movement of service workers is allowed and trade and investment in services booms. Reform discourages anti-dumping measures and improves the functioning of the safeguard regime.
Developing countries obtain sufficient aid for trade and strengthen domestic institutions. Greater openness stimulates foreign and domestic investment. Success at the multilateral level reduces the emphasis on existing regional arrangements, and new regional structures act as building blocks to non-discriminatory liberalization. Greater market access reduces the risk of macroeconomic imbalances. World market integration, particularly in agricultural commodities, creates more stable prices. Negotiations on the new issues on the Doha agenda are well managed. There are no new disciplines that raise the cost of complying with rules without compensating benefits.
Reduced trade barriers stimulate domestic reform, leading to a substantial increase in world trade, particularly in developing countries.
With a 50% reduction in tariffs, the World Bank model suggests a real income gain for developing countries of US $83 billion or 1%, and an exports life of 14.6%. High income countries see a 0.3% real income gain of US $67 billion and a 2.8% increase in exports.”
Baseline Scenario: “Modest multilateral tariff reforms are achieved including some progress in agriculture and textiles. However, developing countries see many import areas excluded. Resistance to agricultural reform limits reductions in domestic and export subsidies.
Limited progress is made in improving market access for services, but anti-dumping measures and safeguards increase as developing countries apply them unilaterally and retaliate against their imposition elsewhere. Aid for trade is only modestly successful with developing countries reluctant to offer strong or binding policy commitments.
Some progress on regional arrangements helps to reduce trade barriers, but inconsistency makes it difficult to use these arrangements as building blocks for further liberalization. Regional macroeconomic instability inhibits the acceptance of major liberalization.
With a 10% reduction in tariffs, the World Bank model suggests real income gains for developing countries of US$ 16 billion or 0.2%, with exports up by 2.5%. High income countries see a real income gain of US$ 14 billion or 0.1%, and a 0.5% increase in exports.”
Worst-Case Scenario: “There are two worst-case scenarios involving either a poor outcome from the Doha negotiations or a collapse of the process.
A Poor Outcome: Negotiations are concluded, but developing countries sign on reluctantly and only after strong-arm tactics by the European Union and the US. Modest multilateral tariff reforms are achieved including some progress in agriculture and textiles. However, major agricultural exporters capture most gains with many developing countries reaping few returns.
Developing countries are forced to agree to new disciplines in investment, competition policy, government procurement and trade facilitation. The impact on growth, particularly of poor countries, is disappointing and the credibility of the WTO is eroded.
Doha Negotiations Collapse: There is wholesale backsliding in commitments to abolish quotas on textiles and clothing, reducing market access for developing countries and the credibility of the system. Anti-dumping, safeguards and product standards are used extensively to restrict imports.
Regional arrangements become inward-looking fortresses. Labour standards and environmental measures are used in blatantly protectionist fashion to reduce penetration by developing countries.
Macroeconomic imbalances reinforce the downward spiral in investment and trade. The integrity of the system is undermined and weaker countries become even more fragile in trade and other global engagements.
With a 20% increase in tariffs, the World Bank model suggests the real income of developing countries is reduced to US$ 32 billion or 0.4%, with exports down 4.6%. High income countries see real income down by US$ 27 billion or 0.l%, with exports down 0.9%.
Either scenario results in a reversal in real income and trade. These results highlight, but understate, the consequences of a breakdown in international cooperation.”
Reappraising the Future – Scenarios for 2012, Accenture.
Accenture, a consultancy to businesses worldwide, has developed four scenarios related to the future of globalization and its potential implications for businesses. The scenarios, presented below, are set in the year 2012.
1. Common Ground: “In this relatively stable and integrated world, tensions between different countries and different social groups are increasingly resolved by collaboration and negotiation. Economic growth is relatively slow but steady, and wealth is shared more equally within and between countries. Business is better connected with the rest of society. Most people are more secure and better off, and there is greater tolerance of diversity. But in richer countries in particular, concerns are growing about the high costs of this stability, which include rising inflation, high taxation, and excessive bureaucracy.
Business implications: Global supply chains tailored for local partnering; low cost of capital; new mass consumer groups in emerging markets; emphasis on co-regulation; common international standards and platforms; ethical consumers highly profitable; corporate focus on connecting with society.”
2. Survival of the Fittest: “Free markets have spread to many countries. Regulation and taxation are light and competition is fierce, forcing firms to be efficient and dynamic. Rewards are high for those who do well and many people are better off, but life is hard for those who do not succeed. Inequalities within and between countries continue to widen. The influence of the United States in business and in international security has grown stronger as other countries focus on more internal matters. While the world is in many ways quite stable, resentment of the influence of ‘big business’ and the perceived dominance of US culture sometimes spills over into hostility and violence.
Business implications: High levels of M&A activity; trade and investment liberalization; supply chains truly global; volatile financial markets; high levels of foreign investment; increasing wealth, but inequalities; move to self-regulation; low cost of capital.”
3. Tempestuous Times: “Economic integration and liberalization have continued but at the cost of greater tension as social and economic divides have widened sharply. Effective dialogue between governments, business and the rest of society has ceased. A few people have become more prosperous but many have been left behind. Global corporations take over many services previously provided by governments. Instability has grown and erupted into violence and conflict in many countries, and security has become the prime concern of both business and individuals.
Business implications: Focus on short-run returns; tight global supply chains; devastating customer boycotts of certain brands; minimal government regulation and taxation; conflicting standards and platforms; cost of capital increasing; high expenditure on security; backlash against certain new technologies.”
4. Worlds Apart: Driven by political and economic insecurities, countries have withdrawn into themselves. They still co-operate in a limited way, particularly on a regional basis, but make little attempt to address global problems. There have been sharp increases in protectionism and a partial reversal of market reforms in many countries. Countries with large internal markets have coped reasonably well with isolation and some groups have found cause for cautious celebration in this new world. But overall, economic growth has been slow and uneven and living standards for many people, especially among the world’s poorest, have fallen sharply.
Business implications: Local supply chains and local markets; high cost of capital; skills shortages in key sectors; fragmented infrastructure and standards; import substitution; multinationals focus on localizing their products; government intervention high.”
Urban Russia At The Crossroads, Russian Cities in the XXI Century: Development Scenarios.The Institute for Urban Economics http://www.urbaneconomics.ru/eng/article/20020522.html.
The Institute for Urban Economics prepared three development scenarios for Russian municipalities in the XXI century for Club 2015, a club for successful professional managers in Russia. According to the authors, these scenarios are an attempt to describe the road to development in the medium and long run.
Scenario One: Running East, Running West, or Running in Circles. In this scenario, efforts to serve the interests of political bureaucrats are at the forefront of activity. As a result, significant administrative barriers that hamper development, the quality of public services, and democratic freedoms are held in place. Urban development consists of varying blends of bureaucratic and statehood models.
Scenario Two: Ad Astra Per Aspera. Stable economic growth promotes the corporation model which gradually transforms into a civil society model. “The fledging democratic institutions support efficient local governance and broad public participation…. Moscow and St. Petersburg acquire the features of a "world city", while small and medium-sized cities form a well-branched network.”
Scenario Three: Our Good Luck. A previously disinterested citizenry creates true local governance and a civil society emerges. Information transparency promotes dialog between city and community members. “A powerful impetus is created for better economic efficiency and social effectiveness of local governance.”
Japan’s Uncertain Future: Key Trends and Scenarios.
Author: David J. Staley The Futurist
From the 1960s to the late 1990s, Japan experienced a period of unprecedented growth and social change. In this article, the author explores the “next period” in Japan’s history, based on three driving forces: the restructuring of the Japanese economy (including the end of lifetime employment), the long-term effects of demographic change, and the impact of the generation the Japanese refer to as “the new breed”, which is more cosmopolitan and individualistic than their parents. Using the driving forces, the author creates four scenarios for the future of Japan in the next 20-25 years.
Scenario One: Entrepreneurial Japan explores the impact of entrepreneurism on Japan’s economy. “Group identification and self-sacrifice were important keys to the post-war reconstruction of Japan, but with the downturn of the 1990s, the Japanese government has perceived the need for more individual initiatives to bolster the economy. An entrepreneurial Japan might take one of two forms. In one version, entrepreneurship rema
ins wedded to the corporate structure, with established companies harnessing the creativity and risk-taking initiatives of individuals for the economic benefit of the company. An alternative version suggests that Japan might develop a “cult of the entrepreneur”, where “the individual is lionized in the popular mind, rewarded for his initiative and envied for his wealth.”
Scenario Two: Japan as Number Two imagines “Japan as a second-tier economy, wealthy and healthy, but not an economic leader. In this scenario, the decline in company loyalty leads to a decline in productivity; as a result, the economy fails to regain its position as number one, even while providing a comfortable lifestyle for its citizens. A noteworthy feature of this scenario is the awakening of Japanese fathers. The time that workers might have spent on the job or socializing is instead given over to the enjoyment of family. Led by the new breed, men take on greater responsibility for raising their children.”
Scenario Three: An Inclusive Society proposes, “As Japan’s population ages and its birthrate declines, many women enter the workforce to fill the need for both skilled and unskilled labor. Japan also addresses its labor shortage by hiring more immigrants to fill job vacancies. Over time, these foreigners are fully welcomed into Japanese society.”
Scenario Four: Cultural Retrenchment and Isolation, “demographic pressures induce a conservative social reaction. Japan resists gender equality and multiculturalism. Women are encouraged to apply their “traditional” skills to care for an aging population. Alarmed at falling birthrates, the government adopts an official policy that encourages couples to have many children.”
Two Scenarios for 21st Century Organizations: Shifting Networks of Small Firms or All-Encompassing “Virtual Countries?”
MIT Initiative on Inventing the Organizations of the 21st Century (January 1997) Authors: Robert J. Laubacher, Thomas W. Malone and the MIT Scenario Working Group
In this working paper prepared by members of the MIT Initiative on Inventing the Organizations of the 21st Century, two scenarios are developed for 2015 that focus on a major uncertainty related to the future of organizations: the size of individual companies. Collectively, the scenarios consider issues such as the global business environment, corporate organization, and corporate governance.
Scenario One: Small Companies, Large Networks: In this scenario, the large corporations of the 20th century have become extinct. Instead, “nearly every task is performed by autonomous teams of one to ten people, set up as independent contractors or small firms, linked by networks, coming together in temporary combinations... and dissolving once the work is done.” Independent organizations take the place of large companies, providing opportunities for social networking, learning and reputation-building. “Many are similar to the writers’ and actors’ guilds of Hollywood. They help us save for retirement, and most of us
pay a percentage of our income to our “guilds” as a voluntary form of unemployment insurance. Most importantly, we derive much of our sense of identity and belonging from these stable communities that we call “home” as temporary projects come and go.”
Scenario Two: Virtual Countries: In this scenario, large global conglomerates dominate the organization of work. “These keiretsu-style alliances, each with operating companies in almost every industry, have minimal national allegiance. Members of the same family work for Sony/Microsoft or General Electric/Toyota, and feel little loyalty to the U.S. or Japan. Employees own the firms in which they work, through pension plans, stock options, employee participation contracts and other vehicles. And just as the modern nation states ultimately turned to democracy, many of the corporations of the 21st century have moved to representative governance. Decisions are made hierarchically, but every year on election day, we choose from slates of managers who vow to do the best job for the company as a whole.”
Creating the Future: Scenarios for the Digital Economy
Authors: Ed Boroevich, Mary Boname, Barbara Gill, Anthony Hempell and Sara Pitman.
Three scenarios explore the interaction of trends related to the adoption of digital commerce technology (such as smart cards, digital cash and home banking) and their potential implications for Vancouver City Credit Union.
Scenario One: Corporations Rule: This scenario envisions the convergence of financial institutions and technology, with banks developing lead technologies such as microchip cards and smart consumer databases. A decline of government power has created an opportunity for financial institutions to offer “personalized” financing for a wide range of needs, such as day care, health care and education, making them an invaluable part of individual communities.
Scenario Two: Crypto-Anarchy: In this world, “the government disappears on a federal level or is so weakened that it becomes nothing more than a figurehead,” resulting in minimal regulation and a high degree of customer choice. “Digital cash is the predominant means of exchange.... [but] due to its anonymous and untraceable nature, it has become impossible to track the income of individuals. Large corporations have disintegrated and the commercial sector is dominated by highly competitive specialized companies.” The fragmentation of corporations and decentralized cash systems threaten the viability of financial institutions.
Scenario Three: Third Sector Ecotopia: “In this scenario, issues concerning the collective health of the public take precedence.” Environmental concerns and a decline of manufacturing jobs combine to create an economy in which the non-profit sector becomes the lead supplier of social services. As decision-making is decentralized to smaller regional/provincial governments, electronic networks facilitate a more advanced form of participatory democracy. Financial institutions provide an array of services, including e-cash kiosks, daycare facilities and community centers.
Cybernomics: Toward a Theory of Information Economy.
Author: John Perry Barlow. This paper was published by the Merrill Lynch Forum, funded by the Merrill Lynch Foundation.
John Perry Barlow states the obvious: we are inhabiting a world, which differs from the one we were born into. Yet, he profoundly illustrates why the world we are currently living in is a co-revolutionary relationship between technology, economy, and society. Mr. Barlow contends that that the effects of revolutionary invention are rarely understood in their own time. Success in the future will depend on an understanding of “relationships, a continuous flow of information, transparency, and a willingness to relinquish control to the unknown.” Mr. Barlow extrapolates the challenges into imagery, and in turn, imagery into challenges. These images of the future make a strong case for humanity to re-visit current assumptions, as we move forward into the 21st Century. This book is good read because the elemental features Barlow poses, stretches the imagination with clearer vision, particularly on how society and economics will evolve.
Scenario One: Relationships Replace Things: In this world, the challenge is to “de-materialize thoughts about commerce – beyond the trading of things.” Ideas and ownership of ideas cannot be physically defined. Economic theory accepts that - unlike things once understood in the Industrial Age - relationships do not increase in value with scarcity. Relationships become an active flow of information—“the greater the flow, the more valuable the relationship, assuming that the flow is being pulled by the voltage of relevance.”
Scenario Two: Context is More Important than Content: In this world, Barlow challenges the reader by asking the question, “what really is content when there is no longer a container for it?” Content becomes less perceived as physicality as context. Cyberspace is context. It is more important. It all started with the advent of electricity. The 21st Century holds the possibility that we will all be connected so that our very synapses travel thousands of miles in a single instance. Cyberspace becomes an environment, not just a medium. Economic transactions will not be “contained” within objects,” but rather, will be a part of the flow of an overall environment.
Scenario Three: The End of Accounting: “The underlying assumption of physical economy is that there is a predictable and tight relationship between inputs and outputs.” As the information economy progresses into the 21st Century, it will challenge us by behaving quite differently. Corporate reliance on predictable results – driven in large part by the constraints of those balance sheets that are the measurement of quarterly success—may be directly counterproductive to long term organizational innovation.” The companies that will succeed will be those that engage in a “gift economy” – a set of practices based on the principle that “what goes around, comes around”. Already, we are seeing the seedlings of this principle within organizations that are seizing a good percentage of this new type of investment capital.
Scenario Four: Transaction Becomes Continuous:“In the economy of life, transactions are in constant flow.” Yet, when we transact today, we think of a deal as something apart from the surrounding flow. In the 21st century, human bandwidth will broaden as exchange deepens in value and trust over time. In this world, “…the more open a system, whether that system is a company or a technology platform, the more likely it is to nourish interactivity and, therefore, stimulate attention.” This is indeed an attention economy.
Scenario Five: Chaos Becomes Opportunity: Mr. Barlow poses quite a startling question: Could neurosis simply be the inability to live with ambiguity? If humanity surrenders to the biological nature of the information economy, then there is a surrender to ambiguity; “…the dream of predictability is no longer a luxury” in this world. To try to predict will be more of a burden and, quite possibly an undoing. “Life is unpredictable in an era of such absurdly expanding (scientific and technological) possibility. Unanticipated consequences are the rule as the (possibilities) increase exponentially…each time we solve one problem, we create several more in the process.”
Scenario Six: Pantheism Replaces Monotheism “If ubiquitous information access does nothing else, it unmasks the mystique of Authority. Even before the Internet, it was clear that the notion of God-given power was in steep decline. In the 21st Century, the workings of “web networked consensus,” in which the Many increasingly replace One, God, (white men) or Authority, emerge more rapidly.”
Scenario Seven: Women Win: “Women will be magnanimous in their victory since they were always more interested in sharing ownership than imposing it.” Cyberspace is all about relationships. “Women understand more deeply than men do.” Cyberspace breaks the glass ceiling of the Old Boy Network, wherein start-up capital was contained in containers with no mind about context. In the context of Cyberspace, the 21st Century is and will more strongly see a business environment where women win.
Scenario Eight: The Southern Hemisphere Rises: “The developing world was spared from the industrial habits of the developed world. The environment of Cyberspace is all about “mind over matter.” In the 21st Century, any individual or organization can place itself on an even footing with the largest IBMs’ or Microsofts’ of the world, “given the right idea properly executed”.
Scenario Nine: The First Shall be Last: The developing world “is ready to join the conversation and they are sick of being regarded as problems…” Mr. Barlow makes a compelling case that developing countries are not so much bothered by chaos or uncertainty as the developed countries are. “They were raised on both (chaos and uncertainty), and the information economy presents possibilities for their harnessing wealth undreamed of before.” “In other words, the disenfranchised can surf.”
New World, Old Order.
Author: David Rejeski, formerly of the Council on Environmental Quality. (Mr. Rajeski is currently with the Woodrow Wilson Center, Washington, DC.) 2001.
Are international institutions that are as old as our grandmothers likely to be as effective at protecting the environment in an increasingly globalizing economy? What role will multinational corporations and transnational advocacy networks play in a New World order? The rapid pace of change unleashes sustainability challenges that are unheard of today. "The challenges of sustainability simply overwhelm the adequacy of our responses," wrote United Nations (UN) Secretary General Kofi Annan in his Millennium Report. "With some honorable exceptions, our responses are too few, too little and too late." In this highly academic and distinguished paper, Rejeski interviews a number of noted environmentalists and economists. He concludes by illustrating Four Future Paths – A Look at Four Leading Concepts that measure conceptual visions of the types of organizational structures that would best perform in an age of “challenges of sustainability”.
Leading Conceptual Scenario One: Global Environmental Organization. “Some prominent voices have called for the formation of a powerful world environment organization. French Prime Minister Lionel Jospin and President Jacques Chirac have called for creating one global environmental agency to pull together and push forward many environmental agreements. Germany, Brazil, Singapore, and South Africa have called for such an organization. The idea was even backed by Renato Ruggiero in 1999, when he served as executive director of the World Trade Organization.
The idea has been pushed for years by a network of people from academic institutions led by Yale's Prof. Esty, who prefers calling it a Global Environmental Organization, or GEO. A group convened in New York City by Esty's Yale Center for Environmental Law and Policy claimed a GEO could cure the fragmentation of policymaking between the United Nations Environment Programme, The United Nations Development Programme, the Commission on Sustainable Development, and the diaspora of international bodies that oversee environmental compacts, each in a different city. "The global environmental governance structure is inadequate for the pollution and resource challenges the world faces today," the group opined. Calling the current regime "weak and performing poorly," participants concluded, "The growing recognition that a number of serious pollution control and resource management issues are inherently transboundary in their scope makes the status quo unacceptable and the need for improved global environmental governance urgent." Esty contends that a GEO would provide more leadership and focus on international environmental issues. An overarching organization could also boost the exchange of ideas between the staffs of various secretariats, he says. A single location would make it easier for less-developed countries to staff negotiations and meetings, which currently are dispersed in time and place. And it could serve as an advocate for advancing environmental treaties that have run aground. If headed by a prominent figure, a GEO could "lead governments toward reaching agreements," says Yale's Speth. Others look to it to pressure the World Trade Organization to give greater weight to environmental agreements. GEO critics decry another bureaucracy and say it might distract from the important drive to get existing organizations to integrate environmental analysis into their decision making. Others say it may achieve little in a world where consensus develops slowly. Harvard's Juma, for instance, says that the failure to make environmental progress may have caused the proliferation of conventions, rather than the other way around. He doubts that proliferation undermines implementation. In response to critics of big, clumsy bureaucracies, Esty argues that a global environmental organization needs not be hierarchical and centralized, and might operate more like a network. "It might be decentralized and might even be virtual," he said. "You want a structure that encourages those that have a role to play to come and play it." Some GEO backers had hoped that the Millennium Summit of the UN in September 2000 would grapple with environmental governance and propose new solutions. But the hundreds of speeches barely touched on the subject. Instead, Esty looks to the tenth anniversary of the Rio Summit in 2002 as the next forum where nations can consider a global environmental organization.”
Leading Conceptual Scenario Two: Boost UNEP.“The governments of Germany, Brazil, Singapore, and South Africa are among those that have called for revitalizing UNEP to serve as some kind of global environmental organization. UNEP's leadership sounds amenable. In late 2000, UNEP Executive Director Klaus Topfer called for the world's nations to strengthen UN institutions at the UN's Earth Summit in 2002, on the tenth anniversary of the biodiversity conference in Rio de Janeiro. "All of us must urge our leaders at the Summit to renew their commitment to the UN and to equip it with the necessary tools and resources to meet the unprecedented challenges of the New Millennium." Topfer said UNEP stood ready to work with all parties to catalyze a new regime of environmental regulations, policies, and partnerships that could address the negative aspects of globalization. But even while Topfer is credited with strengthening UNEP, many observers doubt that it is capable of playing a strong, leading role. Critics blame its charter, budget, structure, past leadership, and even its Nairobi location. UNEP's budget is smaller than that of some U.S.-based nongovernmental environmental groups. Developing nations feared it might become a global agency that would deter their development in the name of environmental protection. They founded it as a creature of the UN General Assembly, which is dominated by less- developed countries, and put it under the direction of an unwieldy, 58-state governing council. Given a general charter to solve environmental problems, UNEP has dissipated its efforts in all directions. To be a strong advocate and coordinator, its critics say UNEP would need a coherent and manageable mission, more funds, more independence from the General Assembly, and a more streamlined leadership system. Some observers suggest merging UNEP and the much larger and better-funded UNDP. But that combination might face some of the same concerns that have restrained UNEP; poorer nations would want assurances that development programs would not lose any resources to environmental programs or be constrained by them.”
Leading Conceptual Scenario Three: Clusters/Environmental Alliances. “Calestous Juma, a Harvard professor and former UNEP official, argues that a global environmental organization is unnecessary and may get entangled in bureaucracy. Saying that a global environmental agency would be "too cumbersome to work," he notes that centralized, hierarchical UN agencies are widely regarded as inefficient, and that UN agencies are increasingly relying on networks of other parties. "The strength of the treaties lies in the fact that they give more power and authority to governments and citizens, not to centralized UN agencies," Juma wrote to the Financial Times of London. Juma's lack of confidence in the United Nations is widely shared. Oran Young, a Dartmouth College professor and director of its Institute of International Environmental Governance, notes that post-cold war euphoria about UN leadership is "giving way to mounting skepticism about the capacity of the United Nations to cope with an array of pressing problems." Currently, each environmental agreement is overseen by a conference of the parties, which delegates duties to a secretariat, scientific advisory body, and other organizations. Instead of a new hierarchical organization to coordinate these bodies, he calls for greater coordination between them in what he calls "environmental alliances" or "clusters." Bodies implementing the Convention on Biodiversity, for instance, already work closely with those in charge of the Ramsar Convention on wetlands of international significance. Those two conventions could work with CITES and other conventions to draft consensus standards for sustainable uses of land. The clusters or environmental alliances have many supporters. Dartmouth's von Moltke, for instance, prefers them to a single, new organization for environmental issues. The U.S., he notes, does not give all environmental authority to one agency. Rather it spreads that authority around among several. Internationally, "five GEOs might be a good idea, dealing with different environmental issues," says von Moltke. Clusters and alliances have been widely discussed, with some advocates calling for various environmental agreement bodies to be brought together physically in one location. One advantage of these, some advocates say, is they could reduce the need for negotiators to fly around the globe from one site to the next for interrelated talks, which can be particularly difficult for small nations with limited budgets. Co-located secretariats could also share information and techniques for solving problems and work out potential conflicts. But clustering and alliances are ill defined and face some of the same resistance as a GEO. Any effort to pull together many staffs into one organization will face bitter resistance, Juma notes. Employees fear losing influence or even their jobs. Conference members would lose authority. And a host of questions entangle the idea. For instance, how would the clustering of secretariats and new alliances with others be structured and promote cooperation? One cluster or alliance might combine multilateral environmental agreements dealing with atmosphere, such as the Kyoto Protocol on climate change or the Vienna Convention for Protection of the Ozone Layer and its Montreal Protocol. Forestry, biodiversity, and wetland agreements might be joined in a cluster. Chemical pollution issues might be clustered, as might marine issues or land-use issues. However they are arranged, clusters and alliances are sure to overlap. Climate change, for instance, can greatly affect biodiversity; forest and land-use choices can influence climate, desertification, and agriculture. How should clusters cooperate? Should they have common staffs to coordinate them? Who will serve as the advocate for new negotiations? Clustering advocates have many questions to answer.
Leading Conceptual Scenario Four: Clusters/Environmental Alliances. “Inertia alone may make major structural changes difficult in the near future, and some observers say that may not be such a bad thing. A new, global environmental organization may make little difference, said a report from London-based Royal Institute of International Affairs. GEO proposals, wrote Joy Hyvarinen and Duncan Brack, "have suffered from a significant lack of detail and a failure to explain why the creation of a new global environmental organization would make any difference to the underlying problems of a lack of resources, a lack of political will, and inadequate policy integration." More effective environmental agreement implementation and better communications may be more important than structure. Some observers argue that reform efforts are better expended on making existing institutions work better. Many voices are calling for strengthening the enforcement and implementation of existing multilateral environmental agreements and new scrutiny of government subsidies, including export credit loans and water rates, that lead to environmental damage. Both are easy to say, hard to do. Others say environmental analysis should be integrated into existing bodies. Rather than setting up a new organization to lobby nations, trade and multilateral banking agencies, David Reed of the World Wide Fund for Nature argues that those institutions would respond better if their own bureaucracies acquired expertise on environmental issues. "The World Bank should increase its capacity to collect environmental data, to monitor trends in environmental performance and issues, to share information with the broader public, and to help develop strategies for addressing environmental problems," contends Reed. No other international institution, he says, "is better positioned or in command of such an extensive range of resources" to address environmental problems. The WTO, IMF, and the multilateral banks also need to integrate environmental considerations into their project planning and evaluations, critics say. And this will happen, some say, only if member nations first integrate environmental analysis into their own trade and aid policies and negotiation strategies. Real progress will be difficult without a strong commitment by the United States to multilateral environmental agreements. In a globe with diffuse environmental authority, the importance of the world's dominant economic and military power is hard to overstate. And to win developing countries' cooperation and support, any new thrust toward environmental agreements will have to be greased with aid from the developed countries to those countries that can least afford short-term sacrifices and new technology needed for sustainable economic development. One way to make that integration effective is to open national and international proceedings to scrutiny and participation from private sector organizations. The United Nations has been moving in that direction. Secretary-General Kofi Annan has praised "global policy networks" of governments, civil society groups, and corporations as "the most promising partnerships of our globalizing age." He looks to them to help lead the world community of nations toward sustainable development.
"They work for inclusion and reject hierarchy. They help set agendas and frame debates. They develop understanding and disseminate knowledge. They allow for stronger, broader consensus on new global standards. They help implement and monitor those standards once they are agreed. They raise public consciousness and speak to our conscience." Such multifaceted networks are, Annan said, "one of the ways we can strengthen the bonds of our global community."
Questioning Assumptions – Exploring Alternative Business Futures.
Author: Ged Davis, March 13, 2002. (Ged Davis is Vice President, Global Business Environment, Shell International Ltd. Swedback Conference, Stockholm.)
This is the latest set of Shell’s global scenarios – completed in mid-2001, with an outlook to the year 2020. These highly detailed scenarios explore the driving forces of globalization, liberalization, and advancing technology, as well as a number of highly detailed forecasts of energy futures. From a social standpoint, these scenarios are of particular interest because the narrative and illustrations explore in detail, the social consequences of these very powerful global forces. A quote from Shell’s prescient introduction: “Soon after Shell finished them (the global scenarios) the shocking events of Sept 11th illustrated both the reality of global integration and the reaction it can provoke.”
Scenario one: Business Class:Growth of the Global Elite: Volatile Growth: Describes a world of highly powerful, networked business. Business becomes the “Matrix” (as in the movie), of the entire world. “Is Business Class good for international business? Well, it’s certainly no picnic. Grinding competition in open, transparent, global markets - aided by new communications technology – brings commoditization and university benchmarking. There’s no room for mediocre performance and rents are under constant pressure. Business success depends on the relationship between the value creating “core” and the rest – more and more of which can be, and become, outsources. The need to find and sustain elusive competitive advantage drives a relentless search for efficiency and innovation . Speed is essential for seizing fleeting opportunities. In increasingly volatile markets, this has to be combined with resilience and superior risk management.”
Scenario Two: Prism: “Describes a world shaped not by what we have in common but by the interplay of our differences. People find their values in roots. They pursue their own versions of modernity by reflecting cultural values and practices more. This does not reject the markets or modern technology. But it is emphasis on the community. Governments are expected to deliver more and better universal welfare and maintain social cohesion, as well as delivering economic progress. Developing countries continue to pursue their path to growth and European Union is strongly coherent. “New European Way” – responds by finding an economic rationale for welfare. Is Prism bad for international business? It is clearly a world in which being local matters. Multinationals must compete in many different markets, each with their own values, rules and requirements. Customers favor ‘local’ suppliers. Access depends on relationships and reputation. Choosing the right partners and recruiting and developing good local staff are vital skills. But it is not just a matter of responding to local conditions and meeting local needs. Multinationals must add value – delivering global best practices and cutting-edge technologies. And doing so in a way that suits the local conditions.”
Terrorism and the Challenge to Globalization
Author: Peter Schwartz, Red Herring Magazine, December, 2001.
In this article, Mr. Schwartz reviews the globalization debate – a pretty clear schism, between the globalization ‘haves’ - those believing it is good for everyone (raising all boats at the global marina); versus the globalization ‘have nots’ - those believing it is not so good, because it “drives the power of global corporations toward economic hegemony and a fall-out will be the result.” Mr. Schwartz reviews the theories of Paul Hawken, Kevin Kelly, and Benjamin Barber to glimpse into the future and forecast scenarios against today’s political realities. According to Schwartz, it may be possible to take a glimpse at where the geopolitical future is headed.
Scenario One: Radical Islam: “If radical Islam is the new Communism, we may be in for a long and ugly war. This scenario involves a world of perpetual conflict with no winners. As atrocities on both sides feed on each other, the dividing lines become deeper and wider in an ever more-terrible cycle of violence.”
Scenario Two: Better International Institutions: “If Mr. Hawken and Mr. Barber are right, there are at least two possibilities. In the best of all possible worlds, democratic governance would begin to emerge globally. Existing institutions would become more transparent and democratic. New institutions would be created to better regulate common elements like the air and the oceans, and to establish appropriate global rules of behavior for corporations.”
Scenario Three: American Hegemony: “But one has no trouble imagining another scenario, in which the United States refuses to surrender any sovereignty and acts unilaterally in its own interests. In such a rogue superpower scenario, the reception for U.S. companies around the world will become chilly indeed, as the world lines up to resist American hegemony. Sympathy for any new horrors inflicted upon the United States will be very limited, and cheers will be heard in Paris and Rome, as well as in the back streets of Gaza and Karachi.”
The World in 2050.
The Challenge Network directed by Dr. Oliver Sparrow. (Dr. Sparrow frequently appears on television and is an accomplished futurist, GBN member, and radio performer.)
The Challenge Network provides a scenario of the world in 2050, starting with five ruling forces that have formed the world in 2050. These five forces that shaped the world of 2050 are known as “Quincunx.” In this world, infant induction software imprints the Quincunx on every newborn mind. The five forces of Quincunx are:
1) ‘Infrastructure’: “This once meant physical transport and housing, energy supplies and crude telecommunications, the management of resource flows and waste products. By 2000, it had come to imply the then-unprecedented web of capability and skill on which business, in particular, could draw. There was great excitement at the turn of the century as this new infrastructure began to lift growth rates and suppress waste. Few could have seen what it means today: a reservoir of knowledge and capability, functionality and finance, all mapped together on demand to serve a volatile need. The unceasing eruption of knowledge and insight accelerates the shocking, discontinuous tectonic processes of creation and destruction.”
2) ‘Options’: “Life, for the majority, was once focused chiefly upon convention and necessity. ‘Options’ once implied something unusual: choice. Today, we have the world’s capabilities at our hand. We can extend our life spans in ways limited only by our personal finances and by the rights, which we have, each won through public service. We can engineer our personalities to meet transient needs. We can choose our social milieu from an almost infinite spectrum, or mix examples of this to taste. The capabilities inherent in the infrastructure afford us the means to envisage limitless possibilities, and to do so in conjunction with simulacra of consumers, partners and those who might object to what we do. We can define an offering, have it given life and put it to market in hours or days, and – in the established world, at least - only those without imagination or taste need to be excluded from this.”
3) ‘Best practice’: “Is both our constraint and our spur. All can choose, and none willingly choose anything but the best. Every enterprise and political entity survives only through the constant satisfaction of volatile public choice. The choice which each agent exercises – on how to present and differentiate itself, on how best to balance complex competing demands – fills the time which delegation of operations to infrastructure and automation has released. The interests of each such agent is interwoven with many others, al exercising expert choice, each instantly critical of actions or policy which does not attain these high standards. In this expert arena, are the key task of area-based governance has shifted from operations to issue harmonization and dispute resolution. The $17 trillion cession by the Anglophone Domain of its major systems management to the Shell-Greenpeace-Cisco hegemon (SGC) is an example of how far this will now go. Four hundred million people have handed over the management of the core – but boring – aspects of their daily life to a transpersonal hegemon, which knows each as an individual and is now a petty deity in their daily lives. Politics, within the para-statals making up the geographical political representation, now focuses on how to tackle issues, and which issues to address. Best practice drives us all forward at a gallop. Stable responses are found in equivalent rates of innovation and in differentiation. The latter has proven a powerful tool, and few regions or activities do not now strive actively to be different from every other agent. A wave of differentiation has swept across a world once seemingly doomed to uniformity. No one of the 12,000 UN-registered para-statal entities is much like any other, and all strive daily both to differentiate their offer from that of their rivals, whilst also harmonizing their interface with everyone else. The rejectionist states that have retained uniformity, which have imprisoned their populations and closed their frontiers have, regrettable, doomed their 3 bn citizens to, at best, poor choices and majoritarian tyranny. It is to be hoped that hegemonic influences in Greater Germany and Japan will bring both from their ‘retirement home’ out to face the world in all its richness.”
4) ‘Connectivity’: “Once meant the ability to link remote agents together, point by point. Now, it implies a shifting, constant pattern of immersion. It offers us a new universe to inhabit. Similarly, those who one dreamed of artificial intelligence saw the natural home for this as the machine. Few recognized what commercial organizations and the fusion of military systems had already achieved until, at least, the first hegemon came spontaneously into existence. The story is too famous to recall in detail: a vastly complex issue fought between two hugely complex and competent adversaries, a sea of data visualized by arbitration software: suddenly, many people saw the same thing from many perspectives and a completely new way of acting came into existence. Knowing what we now know about cognition, we could have anticipated this spontaneous achievement. Indeed, the result – although a true meta-consciousness, capable of making decisions and conducting conversations – is obviously primitive when compared to contemporary interfaces. Simulations of pre-hegemony activities suggest that at peak creative potential, a team could – for fleeting minutes, when confined to a single room – achieve the flickering of what now burns bright and continuous in every home and place of work. Those who have participated in the SGC fusion will know the elation of seeing, in detail, all aspects of the entire Anglophone domain in a single perspective. For many, there is no higher pleasure.”
5) ‘Exhaustion’: “The complexity which these four members of the Quincunx have created could, if ill-managed, paralyze the machinery by which we survive. Each possibility throws up a myriad stakeholders, each armed with ideas, objections, alternatives to consider. This brings us to the last – and most multifaceted - of the five forces in the Quincunx: exhaustion. World systems are known to have exhausted their limits of natural resilience in the ‘teens of this century. Human-created systems reached the same state somewhat sooner. Pre-hegemonic financial systems, for example, attained a degree of integration in which dynamic artifacts - oscillations and other unexpected outcomes – began to set profound limits as to what could be done with them. The European crash of 2007 was as directly attributable to these as to the social forces of the times. The water wars of the Tigris-Euphrates and Arabian Peninsula marked the beginning of resource difficulties. The Gulf Stream instabilities of 2020-2030 brought our collective attention to planetary engineering. Solving these issues required enforced give and take, and political decision-making was required to appease a range of stakeholders, which then-current systems of governance could not at all manage. Hegemons and related knowledge management tools – the so called ‘civil engineering’ of the knowledge economy - helped to drain many of these swamps. Firm, directive leadership by the wealthy nations was also fortunately able to survive the fragmenting forces of the 2007-2013 periods. We of the established world have been fortunate not to fight a major war, as it would assuredly be our last. Intelligence and active data-mined oversight has allows us to control the people capable of developing so-called "garage" weapons of mass destruction. The general spread of dangerous technologies did and does, however, seem certain to lead to a self-propagating accident. Providentially, those which have occurred to date have been contained or cauterized.”
Author: Robert Gunther, a freelance business writer based outside Philadelphia, Pennsylvania. (Please see full narrative and graphic’s to Gunther’s writing on RAND website: <www.rand.org>.)
What will be the impact of the diffusion of manufacturing on the environment? Where will the new environmental leverage points be in a world of manufacturing anywhere? Environmental policies in the manufacturing sector have traditionally focused on the end-of-pipe by-products and emissions from the production of large factories. But the pressures of regulatory policy and public pressure - especially in Europe – is calling for manufacturers to take environmental responsibility for products “across their entire life cycle”. According to the author, Robert Gunther, it means that, “Of necessity, the future of manufacturing will be more fluid and diffused.” Already, we are at the precipice of a major global trend in manufacturing: a trend encompassing dispersal, powerful networking technologies, supply chains that cut-across not only the regional level but also the global level. Among the many images of the future this author illustrates in this article, he includes an entertaining scenario created by Susan Helper of Case Western Reserve and John Paul MacDuffie of the Wharton School, offering two possible images of how the Internet could change relationships between customers and manufacturers in the auto industry.
Scenario: buildyourowncar.com. “It is April 27, 2010, and Kate has decided she wants to buy a new car. Out of many sites that her Web Pad brings up, she narrows her choices to two: Ford.com and Buildyourowncar.com. Ford.com: On Ford.com, she settles back with a cup of coffee and reviews a list of options. She has given the Ford site permission to look at her demographic data, so it knows she likes to windsurf and take her 4-year-old nephew on outings. Ford also receives full body measurements for her and her nephew. The site starts with available models, listed in order of potential appeal. She picks the low-end Focus, and a model is displayed with a roof-rack specially configured for windsurfing boards. She selects it without hesitation. A little further down she is presented with a Lego car seat, filled with Lego building blocks, perfect for her nephew. Based on her height of 5 feet 3 inches, she is offered extra high seats. She then explores other options, including global positioning, and subscribes to a service that allows two-way interaction with local businesses. She then clicks through to get a final price for the custom-configured car, which could be delivered to her driveway in three days. She decides to pay the extra $35 for a test drive from a local dealer. Dealers now make their money selling assorted travel services while her repairs are handled by a local shop. But before clicking on "finance your purchase," Kate saves her Ford Focus configuration and looks at a new site, buildyourowncar.com. Buildyourowncar.com: This site lets her pick components from any manufacturer and assemble them into one car. She likes the styling of the Ford Focus but the reliability of Honda engines. She also would like a Bose sound system that wasn't available at the Ford site. She has a few worries, however. Buildyourowncar.com assured her that all of these parts would fit together perfectly, due to standard interfaces agreed upon by manufacturers in 2008, but Consumer Reports still cites quality problems with these "mix and match" vehicles, as well as ambiguity about who covers warranty costs. Also, there is no physical dealership or opportunity for a test drive. The site does generate a video image of Kate in the car she has configured, showing how easy it is for her to reach controls. She tries out the driving simulation on the site, and plugs in a new BMW engine to get a feel for a high-performance engine in the Ford Focus body. Kate, a little tired from having spent a couple of hours looking for cars, takes a break to think about her options. She doesn't really believe her parents when they say they used to spend days or weeks looking for new cars, and still not end up with one they really wanted.” According to Gunther, “The Internet is expected to move the auto industry to a build-to-order model, as it has in computers (such as the Dell Direct model where you can custom order your computer directly from the company, eliminating any retailers). But how this evolution occurs, and how quickly, depends on major changes in the industry. A mix-and-match car that combines components from different manufacturers would require a level of standardization that has yet to be achieved in the industry.”
The Lexus and the Olive Tree: Understanding Globalization.
Author: Thomas L. Friedman Farrar Straus & Giroux; (June 2000) (Author Thomas L. Friedman has two Pulitzer Prizes and one National Book Award. He has worked for many years for the New York Times.)
Thomas Friedman brilliantly captures globalization’s history, trends, and major tensions between global forces through the use of metaphors, a literary form that illustrate difficult concepts more visually. Friedman writes about the history of globalization, from the fall of the Berlin Wall in 1989 (“the wall”) to the world of “the Web” of globalization in 2000. The trend Friedman foresees as gaining to a level of momentum and perhaps, critical mass, are the various “threats and opportunities that increasingly derive from whom you are connected to.” Globalism is the triumph of free-market capitalism. “The technologies driving globalism are computerization, miniaturization, digitization, satellite communications, fiber optics, and the Internet, which reinforce its defining perspective of integration.” Friedman uses opposing metaphors to create a powerful play of ideas. In addition to metaphors in his book, Friedman recounts many stories; stories that tell of a clash, conflict, or contradiction, that reaches a crisis point and is resolved through the structure of two opposites and their struggle to reconcile. The following represents the central metaphor and plot line of his book. A Globalization Metaphor: The Lexus. “The Lexus stands for speed, modernization, movement, luxury, and globalization.” A Globalization Metaphor: The Olive Tree. “The olive tree stands for everything that roots us, anchors us, identifies us, and locates us in this world – whether it be belonging to a family, a community, a tribe, a nation, a religion, or, most of all, a place called home.” The Interplay Between These Two Worlds: Friedman sees the world, the nation, the town, and even the person as divided between building the Lexus and disputing who owns the Olive tree. “If the Lexus is driven too heedlessly, the Olive Tree will block its path. Those who download for a living will find themselves confronted by those with a bullet hole through its center – the standardized treatment for all suspect packages. Of course, so-called free markets have their rules. Friedman calls this “The Golden Straitjacket,” a one-size fits-all requirement that squeezes and pinches some, but accelerates growth while shrinking politics and diminishing left-right polarities. He wants to unleash the creative chaos of capitalism on a global scale, but create a safety net to catch those mangled by the Lexus careening through the Olive Tree grove.” (New York Times)
The Return to Depression Economics: 2010. A scenario from the book, “The Return to Depression Economics.”
Author:Paul Krugman, published in 1999, WW. Norton & Company, Inc. New York, NY.
“Surely the Great Depression could never happen again. Or could it?”
Paul Krugman, Professor of Economics at the Massachusetts Institute of Technology wrote the book, "The Age of Diminished Expectations" which was called "perhaps the best little book on economics in the past ten years." (Boston Globe). In his recent book, "The Return of Depression Economics", Krugman argues that in 2010, we will see a return to literally, depression economics; which "means that for the first time in two generations, failures on the demand side of the economy--insufficient private spending to make use of the available productive capacity--have become the clear and present limitation on prosperity for a large part of the world. " It's the same problem that was at the root of the 1930s depression. And while it took a world war to solve that problem, Krugman sees solutions that are far less dramatic, but that require a willingness to chuck obsolete doctrines and think about old problems in new ways. Krugman draws a scenario of China, which Krugman calls "corrupt, croney-ridden, with terrible banks, but saved so far by its inconvertible currency.
Scenarios of China in 2010: "Could China go the way of its neighbors? Possibly: but the crisis would look a bit different because of the capital controls and the absence of large foreign-currency debts. One scenario would involve massive domestic bank runs---with the government hesitant to provide the huge injections of cash needed to stop the runs, for fear that putting too much money into circulation would create such an incentive to swap yuan for dollars for the currency controls would prove ineffective.
The other Scenario of China in 2010 would involve a sort of Japanese-style slowdown in domestic spending, which the government is again unable to fight effectively, not because the interest rate is zero but because rates can go only so low before, once again, causing capital flight that swamps the controls. In both cases the crisis story builds on a real problem: China's banks really are a mess, and the country does have flagging private investment and consumer spending.
Back to the present: The good news is that the Chinese government is well aware of these risks and is trying to combat them through massive public investment spending, a classic Keynesian remedy. There clearly is significant capital flight from China despite the controls, but it is a steady leakage rather than a torrent, and the country's immense foreign exchange reserves are still intact.
Summary: The clear and present danger is not that China itself will collapse, but that --- as it perceives the pressure gradually increasing - it will choose to devalue its currency. This would not lead to catastrophe for China, but would endanger whatever recovery is taking place elsewhere in Asia.
The Online “Webolution” to 2010. “Future Consumer.Com”
Author: Frank Feather, published July 2000, Warwick Publishing Company, Ontario, Canada.
The author makes an excellent case that by 2010, the Internet will gobble up 31% of consumer spending, “leaving most brick-and-mortar retailers in rubble.” In this book, Feather portrays a history of Internet, webonomics, multiple perspectives of the Internet; who will shop online, what they will buy; branding, and e-marketing strategy.
The author in the foreword presents a scenario of "Webolution" of Shopping to 2010: “The Web takes shopping out of the shops. By 2010, the Internet will gobble up 31 percent of retail spending, leaving most brick-and-mortar retailers in rubble. The head-spinning Internet Revolution hurricane, or "Webolution," is not east to forecast. However, before it's done - around 2018 - it will reverse and unwind virtually everything that the Industrial Revolution put into place. It will smash the mass consumption economy to smithereens and re-center it on the home. The Webolution is so big that few grasp its significance. Doubtless, the plodding plowman didn't "get it” when the first steam train puffed past his field. Likewise, the metal-bending blacksmith didn't "get it" when the first "horseless carriage" sputtered past his shop. … But this Webolution will rock the world, again utterly transforming life and commerce. And the rewards will accrue fastest to those who embrace it first. Click-happy shoppers are flocking online and will stun shortsighted brick-and-mortar retailers who stubbornly insist that people will always come to their stores. Online sales will kick in big time during 2000 - 2002, growing rapidly throughout the decade to top $1 trillion by 2010. By then, the Web will be 100 times bigger than today - a tidal wave, drowning those who can't or won't surf…. Around 2005, online purchases will reach 10-15 percent of total sales in most categories, wiping out the profit of most retailers. By 2010, online shopping will grab 31 percent of retail sales - 43 percent if you exclude the automobile and education categories. All but the most savvy will get killed. Most strip malls and many shopping malls, along with half the department stores, supermarkets, retail chains, banks, and local shops, will vanish without track ad click-and-buy e-tailing takes over. Who needs thousands of banks, bookstores, supermarkets, hard ware stores, drug stores - or any other kind of store - if you can buy everything from a few Web Sites? ... By 2010 a majority of Americans will live what Bill Gates calls a "Web Lifestyle" and will do at least some e-shopping. Most of them will do most of their shopping online. Already, people are buying everything from luxury automobiles to the drug Zantacs over the Web, and in the near future the question will be, "What isn't selling online?" For 2010, sights such as Amazon.com and EBay will have served as living laboratories of the future. In 2010, the end user's list of bookmarked favorites will determine the winner verses loser and, it will be a simple as that. From 2001 - 2010, expect a major shakeout in retail. The debate on who will win - pure bricks, pure clicks, or bricks and clicks - will be a matter of vying for consumer attention. “
And that's the story.
The Future of the New Economy
Author: Peter Schwartz, chair, Global Business Network. Red Herring, July 2000.
The author asks profound questions about what is it that really drives an economy? With the recent and tremendous "explosion" of companies and new industries, the future - boom or bust - new economy or old economy - it is literally, "up for grabs". It comes down to something very fundamental - our beliefs. Three typologies of popular economic theory have emerged in support of the scenarios: the new economy theorists acknowledge the potential growth of a more quickly moving and rather accelerating economy with more reliance on brains than brawn; the network effect theorists acknowledge the "new, new thing", but for some businesses and industries, growth will occur in spurts; for others, success becomes a stair-stepping process, primarily because markets become so efficient, that anyone with a good strategy can compete; the third set of theories questions the "hype" of the new economy, with tensions running deep on a real definition of the age old question of productivity, newly shrined by the prism of IT. Based on these theories, the author presents three scenarios and completes the article with investment strategy implications.
Scenario One: New Economy Scenario:“First is the new economy scenario. It's a world of mostly winners. Incumbents fall, and there are many new kinds of players in the world economy. This is a world where education is at a premium, and knowledge workers have the higher value-creation potential. It's a world of a dispersed global workforce, with an increasing proliferation of skills. And it's a world where all the value-creating units are linked together in virtual value chain. It's a world of global electronic markets that create trade in goods, services, jobs, education, and finance. It's a world where liquidity is inevitably global, as is investment. And it's a world that relies intensively on the information technology infrastructure expanding and accelerating. It's a world where skills and knowledge matter. Where intellectual property rights are critical. Where information and data stores have intrinsic value. And where we use networks for interchange and transaction of values. It is a world where rewards are more often measured in equity than cash, and that equity in turn is based on intellectual capital more than physical capital.”
Scenario Two: Incremental Scenario: “The second scenario is an incremental scenario. It's a world of a much more modest transformation. We eventually get to the new economy, but much more slowly. Here, the incumbents recover and mostly win. There are many winners and many losers. It's a world that resembles today for quite a long time.”
Scenario Three: An Illusion:“The third scenario is a world where the new economy is principally an illusion. It's a world that leads inevitably to two tiers, where there are few very well off, and many that have fallen far behind, unable to compete in the IT-driven economy.
It's a world where there are some of the old winners, and very few of the new. Most of the new players crash and burn along the way. And tomorrow resembles today in most important respects.”
Scenario Four: The Crash: “The fourth scenario is the crash. Like Icarus: we fly too high, and crash and burn, or burn and crash. This is a world where almost everyone is a loser. It's a world where the leverage finally crashes the stock market, and brings down the average consumer. Most of the technology turns out to be hype, and it really isn't nearly as productive as we all imagined.”
Scenario learning: A powerful tool for the 21st Century planner.
Authors: Jeff Ellis, Steve Feinstein, and Dennis Sterns. Journal of Financial Planning Denver Apr 2000
Scenario learning is a technique - like scenario planning - that predicts possible outcomes. Increasingly, it is being utilized by financial planners helping clients understand their personal financial futures within the context of the macro environment. The real strength in the technique is the bonding between financial planner & client and the learning that comes from the exercise. This article explains two different approaches to scenario learning and demonstrates ways to develop these possible futures for financial planning. Based on the following assumptions about the US economy, the following three scenarios were developed by the authors in a series of workshops. The assumptions were: technology stocks revive in first decade of the 21st Century; index funds outperform most passive managers; Internet won't impact high-touch financial planning; and baby boomer trend brings prosperity.
Scenario One: Boom Times:" The baby boomer wealth effect (championed by Harry Dent and others) will create tremendous prosperity for the next ten years, followed by a period of lower equity growth as boomers pull money out of stocks, instead of putting it in. Technology stocks continue to flourish, with portfolios of 50-70 percent high-tech allocations becoming common. The wealth effect continues to balloon vacation properties and all sorts of upscale consumer goods. Spending stays high through traditional retailers and Internet shopping malls. The client embraces the good times, spends lavishly and saves less as investment returns seemingly make saving unimportant. The good times help pay down the national debt substantially, causing a high demand for bonds and a resulting decline in interest rates. Just as boomers start retiring, they are forced to stay with a high percentage of stocks, liquidating a bit each month for cash flow, rather than rotating to low-paying bonds. "
Scenario Two: Margin Bust: ”This scenario assumes "that the Internet severely compresses profit margins for many goods and services, which has already happened in a number of sectors. As margins become squeezed in 2003-2005, corporate earnings for many companies flatten out, causing further erosion in price/earnings ratios. Technology stocks still have momentum, but profit "accidents" become much more frequent as certain core non-technology businesses cut information technology spending to prop up anemic cash flow. As the stock market sputters to a stop in this scenario, the wealth effect shifts into reverse. Baby boomers begin to panic, with their retirement in sight, and double-digit returns no longer are the norm. Reduction in spending compounds the margin problems, creating a downward cascade effect. We will call this scenario the "Margin Bust."
Scenario Three: Return to Sanity:”This combines the other two scenarios with entirely different possibilities. In this third scenario, "speculative excess is rung out of the economy in a recession that lasts for almost a year. It doesn't cause a meltdown but actually refocuses on sound financial planning principles of diversification, saving and more modest expectations. The baby boomer megatrend pulls the economy along but not until many of the dotcom frenzy dies off and marginal businesses are forced to merge or go out of business." The authors agree that while this third scenario is not as extreme as SC1 or SC2, it is useful. It is similar to the modeling of wild fluctuations common to financial planning -over two to three year time segments such as Monte Carlo simulations, which is critical to viewing this future realistically.”
B2B or not B2B? Scenarios for the future of e-commerce.
Author: David Targett European Business Journal London April 15, 2001. Vol 13 Issue 1.
The objective of this article is to review the past fifty year history of information technology and its development, picking up lessons on the way. The premise is the increasing recognition that scenarios are useful in an industry that is nearly impossible to forecast - IT. After defining e-commerce, including B2B, B2C, G2C, G2B, and G2G, and reviewing the history, and muliplex-odium of recent published forecasts, the author brings the reader to a set of three scenarios on e-commerce & e-business. He reminds the reader to remember that e-commerce is simply this: buying, selling, and marketing on the Internet. And, e-business is simply this: the same thing embedded into business processes.
Scenario 1): Gold Rush:“In this scenario e-commerce growth is at the low end of current expectations. It is characterized by the following features: The Internet is in widespread use for study, personal information and entertainment. This is almost inevitable given present trends. B2B grows but never reaches the highest predicted levels: there are too many cases of deliveries going wrong; too many products prove to be not amenable to this sort of trade. E-marketplaces run into problems over anti-trust and monopoly legislation. B2C is a minority interest: customer confidence is lacking, people use mobile telephones for telephoning and digital TVs for viewing a wider range of channels but not for accessing the Internet. G2C is a minority activity: the government does not get its act together, too few people have access or are interested in using the service. This scenario carries a number of implications. Children will have to be able to use the Internet to avoid being disadvantaged in their studies; businesses should identify whether they are in the 20% or so who must trade on the Internet if they are to survive. The sure winners will be companies supplying Internet equipment and services. This is the reason for the name: Gold Rush. In the 1840s Gold Rush a lot of money was made but not from gold. It was made from selling picks and shovel, and food and accommodation. Likewise under this scenario the people making money will be the Internet equipment suppliers.”
Scenario 2): New Labour:“In this scenario e-commerce is making a significant difference to many, but not all, aspects of business. Personal Internet use is widespread, even more than the previous scenario. B2B grows to the levels indicated by the more optimistic forecasts, 40% or so of total trade. The Internet becomes the normal way of doing business in most industries. B2C grows but is by no means a dominant factor in retailing. Some of the present obstacles to growth are overcome but others are not. G2C grows to levels commensurate with Internet use and B2C; the government gets its act together: people can access government services on the Internet ... if they want to. The factors promoting e-commerce and the obstacles tend to favour B2B. And the lower costs have immediate impact on the bottom line. So, it is quite feasible that B2B will move ahead while B2C lags. The implications for scenario two are mainly for business and the need for them to get up to speed on B2B. They will have to adapt to it or die. The reason for the name New Labour is that it might seem that under this scenario a lot is going on but the expected significant changes to our lives do not materialize. Which is the odd one out - the early nineteenth century factory, the passenger railway or the telephone? All are technologies that made an impact not just on business but on society as a whole. Railways made long distance travel a real possibility for ordinary people. The telephone changed the nature of communication, making it much more personal and direct. However, the odd one out is the early nineteenth century factory. The first mass production technologies changed the whole structure of societies. Previously textiles had been manufactured in literally cottage industries by extended families. New technologies, such as the spinning jenny, were not affordable, especially as larger machines meant increased economies of scale. And the new machinery needed water for the steam power. The cottage industries disappeared and production moved to factories. The machine age and the division of labour came about. Towns grew up around the factories and the nature of society was radically different. The final scenario relates to significant social change.”
Scenario 3): Second Industrial Revolution:“The third and final scenario presents the case where there is universal access and use via a range of technologies. Personal Internet use, B2B, B2C and G2C are the way things happen. The result is radical social change. What might this change look like? We might speculate as follows. Internet companies dominate global business. People with the technological and management skills to work in them are the elite of the workforce. They can move around and they owe their loyalties to their own groups and companies rather than to national governments (Angell, 2000). In his book Angell likens the new knowledge workers to the barbarians arriving at the gates of Rome. Nation states diminish in importance. International power structures change. Social divisions increase in magnitude. There is a digital divide. Transport and logistics structures change. Goods are delivered rather than collected. People rarely travel on business: they use enhanced video-conferencing perhaps via mobile phones. Sainsbury's car parks become adventure playgrounds and Heathrow's second runway is planted with flowers. Housing changes, becoming much more self-contained, especially for the 'haves' rather than `have-nots' of society. Under this scenario the implications are vast for both people and businesses. Governments will have to move speedily, perhaps more speedily than they are able, to protect society, economies, the environment and businesses
from the many negative impacts of these changes.”
2020 Vision – The Next Quarter Century in Management Consulting.
Report of the Association of Management Consulting Firms, Industry Insider. 01/01/98.
Discussions by members of the Association of Management Consulting Firms (AMCF) and their guests at the association’ s Annual Fall Meeting. The members felt that the next quarter century will see massive and ever-accelerating change in management consulting. A first look ahead toward the Year 2020, from Richard Armitage and Ted Gordon, examined the environment for management consulting created by international relations in the post-Cold-War world, as well as the globalizing economy and developments in technology. Richard Armitage believes that historians and statesmen looking back over recent years have devoted too much attention to trying to discover or define a “new world order.” The post-Cold-War, no longer bi-polar world, with an increasingly globalizing economy and new patterns in international relations, is and will be disorderly. Yet some patterns and trends are emerging. The fundamental international challenge is to reinvigorate and renew international relations in terms appropriate to the post-Cold-War era. The biggest international challenges will be in China, Russia, the Mid-East, and the Kashmir-Pakistan area.
New demands within the business environment create a range of possible scenarios for the future. These were presented at the conference by four consultants: Scenario 1: the role of information technology and business strategy; Scenario 2: the business of “business intelligence,” Scenario 3: the causes and effects of privatization; and Scenario 4: possible crises and risks for management consulting in the near-term future. Some of the lessons learned by the scenario exercise include - consultants in the future can supplement the capabilities of in-house staff; deliver bad news when necessary; apply special skills when needed in the short term; act as an independent source of information; and anticipate as well as help to develop strategies for anticipating and managing risk, as well as coping with ongoing change.
Industrial R & D in 2008.
Author: Charles F. Larson, Research Technology Management, 11/01/98.
Changes in industrial R&D will accelerate over the next 10 years. Scenario planning indicates that there are several drivers of change, the most prominent of which are information technology and globalization. People in the industrial R&D laboratory of 2008 will be more risk-taking and business-oriented, with skills that are constantly being upgraded. Technical intelligence will be fully integrated throughout the firm and far more comprehensive than today. Technical work will be more efficient and effective, utilizing a wide variety of outside resources. Flexible organizational structures and true enterprise integration will capitalize on a new era of creativity for growth and competitiveness. Leadership and skillful management will be critical elements of these evolving processes. Five scenarios were developed for potential changes in R&D management, technology, and innovation due to evolving "forcing functions" or drivers over the next 10 years, which included information technology, globalization of technology, growing diversity of the work force, integration of technology planning and business strategy, partnerships and alliances, and customer power. The scenarios were characterized as follows:
Scenario 1: Cyclical Change: This scenario assumed that the current paradigm in R&D - to carefully control costs and to do more with less-is a cyclical change that has occurred before. Thus, while the environment for R&D will continue to evolve over time, there was no fundamental, long-term change taking place. It also assumed that different industries were in different phases of the cycle. Therefore, it was recommended that business sectors that lead the cycles be identified as early indicators, that techniques for adapting to change in these sectors be described, and that these techniques be disseminated for the benefit of trailing business sectors.
Scenario 2: Globalized R & D:The prediction in this scenario was that as companies continue to become more global, the R&D function will gradually spread throughout the world. Of course, globalized R&D is already a reality in many companies, such as Procter & Gamble and 3M. The thought was that teams will function through electronic networks and that management of the R&D function could be directed from remote locations. It was concluded that many companies had already globally integrated their R&D efforts more than other business functions. In a recent survey of 308 CEOs, the Foundation for the Baldrige National Quality Award found that "globalization" was judged to be the most important trend currently affecting U.S. companies.
Scenario 3: R & D Through Partnerships: In this scenario, it was assumed that technology will become increasingly complex and more expensive to develop. Therefore, many companies will choose to maintain their key competencies only in selected core technologies and obtain additional capabilities through partnerships and alliances with other companies, government laboratories, universities, and contract R&D organizations. Moreover, various R&D support services will be integrated with other corporate or business-unit functions, resulting in some R&D leaders managing virtual laboratories. An example of this trend is the contracting to outside vendors of information-technology and human-resource-development functions.
Scenario 4. Innovation Function Absorbs R&D: This scenario envisioned that the future focus of most firms will continue to be on revenue growth through creation of new products, processes, or services, and through the development of new markets. In response to this intensified emphasis on innovation, the R&D function will merge with marketing, and R&D leaders will become business managers as well. Many companies have already initiated efforts to address new customer expectations through improved integration of marketing and R&D, as well as through direct interaction of R&D with a company's external customers, i.e., "4th generation R&D".
Scenario 5. Networking Counts: In this scenario, it was assumed that networking with peers through organizations such as IRI will become more important. Changing conditions in the R&D environment will be accommodated so long as opportunities exist for sharing best practices through a growing variety of electronic techniques as well as in traditional, face-to-face gatherings on specific topics. All R&D managers are becoming "information managers," and all companies are now "information machines," regardless of what products they sell.
Most Likely Scenario: The author believes that the most likely scenario is a composite of the scenarios outlined above in what he outlines as the “Laboratory of 2008.” See original article for more details.
American Consumers in 2025: Three Scenarios (Part 1).
Author: Gray Knight, Journal of Advertising Research, Nov/Dec 99, Vol 39 Issue 6, p 71, 8p, 3 charts.
Scenario planning is a way to help think about and plan for the future in spite of the inadequacy of the normal research tools. Scenarios are not predictions about the future. They are simply stories about an imaginary future world. They allow us to set out a range of possible futures, which then can be used to develop and evaluate strategies. Most importantly, scenarios help to identify at least some of the driving forces that are likely to shape the future.
Scenario 1. Li Ping’s Story – Orlando, Florida, February, 2025. “Li Ping waits at the loading dock as the boxes of groceries coming off the end of the conveyor belt are placed into his truck by his coworkers. It is early in his shift, the sun just setting, and this is the first of three times that he would be here today at the warehouse in Orlando. Ping works for WalMartExpress, the largest retail bundler in the United States. WalMartExpress had formed from the merger of Walmart and Federal Express two decades ago. With the growth of on-line ordering of lower-priced consumer products, marketplace advantage went to the company that could deliver goods to consumers' homes most efficiently. By combining orders into large bundles of goods, shipping costs could be spread over more items, offering savings to the consumer and providing a cost advantage to the most efficient bundler.
In fact, shipping charges are no longer listed as a separate item on the consumer's bill. What the consumer shops for is the minimum total delivered price for the bundle of goods purchased, including the shipping charge. On-line agents have long since made finding the minimum price for a bundle of hundreds of goods fast and easy. Consumers do not need to invest time in making price comparisons. Agents simply do that for them. Perfect price information drove out price differences across bundlers and meant the end of coupons and discounts for individual products. The price of the bundle is all that matters and WalMartExpress's software provides that answer instantly.
A few decades ago, when commercial use of the net was new, the common wisdom was that companies who controlled the on-line ordering process would dominate every consumer market. This turned out to be true where the product itself could be delivered over the net, as with music and movies. When the supply chain required the delivery of a physical product into consumers' hands, however, the winning business model was based on efficient logistics, not on software.
The speed of the Internet was critical to giving the advantage to the bundlers. After a slow first decade or two, the Internet had finally gotten fast enough to be truly useful. There were no real tricks to on-line ordering software or developing on-line agents that were not understood in the 1980s, so there was no lasting proprietary advantage in the electronic ordering and management of the customer relationship. If a company didn't have a system, it could buy one, or buy a company that did.
Once the net became fast enough, some of the early mover advantages went away. The cost advantage of efficient delivery systems overwhelmed established on-line equities and partly offset the advantage of well-populated consumer databases. Speed in the movement of information in and out of homes and processing speed made all the ordering systems equal.” See original article for more of the scenario.
American Consumers in 2025: Three Scenarios (Part 2).
Author: Gray Knight, Journal of Advertising Research, Nov/Dec 99, Vol 39 Issue 6, p 71, 8p, 3 charts.
A continuation of the article above. Outlines three scenarios of American consumers in 2025. Scenario 2: One Scenario of U.S. Social Change to 2025(for scenario 1: Li Ping’s Story – Orlando, Florida, February 2025, see summary above). “In hindsight the future is always obvious, and it's true that the signs were all around us back at the turn of the century, if only we'd paid attention. But a quarter century ago, almost nobody was writing about how "time-shifting" and "age-bending" would rewrite the "rules" of the life cycle--or of American society as a whole, for that matter.
Sociologists and marketers had spotted the phenomenon of kids "getting older younger"--girls giving up their Barbie dolls at earlier ages and many kids being more technologically savvy than their parents and teachers. And everyone knew the aging Baby Boomers were doing their damnedest to stay younger longer. By the turn of the century, the age at which women were having babies was being stretched so far in both directions that it wasn't unusual to see a 15-year-old mother proudly carrying her first newborn, followed closely by a 45-year-old woman in the same situation. In evolutionary terms, the image was no less than stunning, but hardly anyone would have noticed it. After all, in 1999, the Rolling Stones and Bruce Springsteen were still fighting it out at the top of the charts as 50-year-old Boomers and their kids both snapped up their albums.
Even so, very few people realized that these clear signs of "time shifting" and "age bending" were merely a prelude of things to come. Of course, the Baby Boom generation played a pivotal role in this story. Shortly after they burst on the scene after World War II, the Boomers pioneered dramatic changes in each stage of life as they passed through it--from practically "creating" the concept of the modem teenager to trailblazing the challenging path of the two-career family to soundly rejecting the biological limits of menopause--with a little help from modern biotechnology.
After all this, it was common wisdom that the Boomers would redefine what it meant to grow old. Little did we know, however, that they had their greatest trick of all saved up for last. In close conspiracy with their offspring--the upbeat millennial generation--the Boomers not only redefined the later stages of life; they recreated the very idea of the life cycle itself. Here's how it happened. The foundation was laid by the most primal of forces: the increasing ability of people to exert ever-greater control over the processes of birth and death. Today, the average life expectancy of Americans is pushing 90 years for women and 85 for men--hardly the stuff of science fiction, perhaps, but a stunning gain of more than a decade of life in just a quarter-century. One in five people make it to their 100th birthday party today--and that number is rising.
But technology changes fast, while people change slowly. These changes took a long time to wind their way through the collective psyche. We would never approach our lives in the same way again.” See original article for more on this scenario.
American Consumers in 2025: Three Scenarios (Part 3).
Author:Gray Knight, Journal of Advertising Research, Nov/Dec 99, Vol 39 Issue 6, p 71, 8p, 3 charts.
A continuation of the article above. Outlines three scenarios of American consumers in 2025.
Scenario 3: Susan Cohen, 1990s Child – Detroit, Michigan, March 2025. (For Scenario 1. Li Ping’s Story – Orlando, Florida, February 2025, see summary above; for Scenario 2: American Consumers in 2025, see summary above). Susan Cohen stared at her monitor screen as though it might suddenly jump up and make a suggestion on its own. "Let's see," she said, "how can I get 34 hours into a 24-hour day?" "That is illogical, Susan. You are suggesting a task that is by the parameters of its definition impossible. If you insist on pursuing such activities, I'm afraid I can't possibly be expected to help you," the voice-activated screen said. "Sorry, sorry," Susan said. She had been born in 1991 and was 25 before full human-computer verbal interface had become common. It still struck her as strange that she could actually engage in conversations with a screen instead of just talking to it. But it turned out Ray Kurzweil was right back in 1999 when he predicted that a $1,000 computer would be essentially as smart as a human by 2019. (Actually the breakthrough had come in 2017 but most people forgave Kurzweil a few months here or there.)
Of course, her daughter found it strange that her mother found the whole process of human/machine interface strange at all. Born after "The Kurzweil Effect" became a reality, young Susan increasingly found it difficult to relate to her mother and grandmother. Intergenerational strain was the least of Susan's problems. As a single woman with MGDs (or multiple generational dependents) Susan found it difficult to keep up with the basics of life. Her mother constantly told stories of the joy of going to the grocery store and actually playing hide and seek with that night's dinner, but Susan, who remembered her mother chasing from store to store and cursing every minute she stood in line, viewed such talk as evidence of either early onset of Alzheimer's/Dementia or just another attempt to justify her increasing reluctance to fully participate in life.
For Susan, shopping was both easier and more difficult than it was in her childhood. The basics of life were essentially all taken care of. Thanks to embedded technology in her kitchen, laundry area, and pantry those products that weren't on CHR (continuous household replenishment) essentially ordered themselves whenever they ran low. CHR products, including paper goods, personal toiletries, and pet food, arrived like clockwork two or three days before they were needed. Even the accounting for the transaction was handled in a transparent way. Every payday a certain percentage of Susan's check was forwarded to Cybergrocer. Orders were then debited from the account, and if Susan, Jr., managed to break the encryption codes (which she did on a frequent basis to order more ice cream), Cybergrocer extended a limited amount of credit.” For more on this scenario, see original article.
Artifact Projections from 2005.
Author:KevinKelly,Philips Website. URL: www.philips.com/design/vof/.
In the past, Philips Company has had some global successes in innovation (CDs) and some terrific flops (CD-i). If the company learned anything, it was that “social trends and cultural preferences are as important to inventions as technological advances.” The company assembled a team of sociologists, graphic designers, cultural anthropologists, engineers, filmmakers, ergonomists, and futurists to develop an abstract framework of cultural and technological trends. The team probed such intangibles as our shifting sense of time, multiple identities on the Web, nature awareness, and browsing patterns. From this profile, together with a sense of technical options, Philips came up with more than 300 scenarios, or short stories, about future products and services. From those 300, Philips compressed the possibilities to 60 clearly defined but interlocking concepts, which it crafted into a set of actual models.
The company took these models, immersed them in real environments, and made a video "commercial" about each, including how the proto-gizmos interacted with each other. For more on the actual scenarios and this project see www.philips.com/design /vof/.
The Future Paradigm for Socio-Economics: Three Visions.
Author:Richard Hattwick, Journal of Socio-Economics, 1999, Vol. 28 Issue 4, p 511, 22p, 2 charts.
Presents visions of three different paradigms that might define the socio-economics of the future. This was the result of a three-day conference held by The Society for the Advancement of Socio-Economics (SASE), at the University of Wisconsin-Madison. In this paper, the three paradigms for Socio-Economics (SE) are envisioned as being nested rather than adjacent or overlapping.
Vision 1: "Psychological Socio-Economics" (PSE): “In this vision SE retains most of what is currently found in mainstream academic economics but replaces the assumption of economic man with the richer concept of psychological economic man. The full body of academic psychology is made a part of the field of study. However, this version ignores significant portions of the knowledge base found in transpersonal psychology and clinical psychology, just as academic departments of psychology tend to pay less attention to them. An excellent recent survey of the potential content of this vision is found in Hugh Schwartz' recent book Rationality Gone Awry? (Schwartz, 1998). Peter Earl's earlier survey also spotlights much of the content that would fit here (Earl, 1988).”
Vision 2: "Sociological Socio-Economics." “This case incorporates all of the first vision, but adds a strong emphasis on issues of equity, justice and community as well as a focus on social institutions and their impact on the economy. This vision brings a large amount of the discipline of sociology into the paradigm. It is tempting to suggest that the likely future content of this vision is summarized by Amitai Etzioni's The Moral Dimension (1988), his The New Golden Rule (1996), and his Essays in Socio-Economics (1999). However, Etzioni's writings do pick up some of the important additional features introduced by the third vision, so his work cannot be fully captured by Vision 2.”
Vision 3: "Humanistic Socio-Economics" (HSE) or "Humanistic and Holistic Socio-Economics." “In this vision a large number of the issues dealt with in the humanities and in biology are incorporated into the paradigm. History and even spiritual matters also become legitimate topics of Socio-Economics analysis. History is important because it is needed for the study of evolution and dissolution. The spiritual-self help literature is useful because it helps us understand the images or mental models underlying human behavior in various historical contexts. Books that come reasonably close to illustrating this approach are Robert Solo's Economic Organizations and Social Systems (Solo, 1967) and Manuel Castells' three volume work entitled The Information Age: Economy, Society and Culture (Castells, 1996, 1997, 1998).” See article for background, methodology, modeling.
The Roaring Zeros – Wealth in 2020.
Author:Kelly Kevin, Fortune, Sept. 1999.
The good news is you'll be a millionaire soon. The bad news is, so will everybody else. No bubble, no crash; instead, a decade or more of continued good times. What if the Dow doesn't fall to 3,000, but zooms to 30,000 in four years? Scenarios are all about “what ifs”. What if we are just at the beginning of the beginning of a long wave of ultraprosperity? Picture 20 more years of full employment, continued stock-market highs, and improving living standards. Two more decades of inventions as disruptive as cell phones, mammal cloning, and the Web.
Wealth in 2010: “The market fluctuates daily, but by 2010, the Dow will soar past the 50,000 mark. In 2020 the economy, for the first time, reflects four forces at once: demographic peak - the largest, best-educated, most prosperous generation that has ever lived is entering its peak years of productivity, earning, and spending; technology rush - the largest deployment of novel products and services, labor-saving machines, and life-changing techniques; financial revolution - money itself is undergoing a revolution. The velocity of money - how often it changes hands – continues to increase; global openness - the spread of democracy, open markets, freedom of speech, and consumer choice around the globe accelerates.”
Fast Forward to 2020: The Dow at 100,000: “After two decades of ultraprosperity, the average American household's income is $150,000, but milk still costs only about $2.50 a gallon. Web-enabled TVs are free if you commit to watching them, but camping permits for Yellowstone cost $1,000. Almost everyone working has signed up for a job that does not exist (at the moment); most workers have more than one business card, more than one source of income. Hard-hat workers are paid as much as Web designers, and plumbers charge more for house calls than doctors. For the educated, the income gap narrows. Indeed, labor is in such short supply that corporations "hire" high school grads, and then pay for their four-year college education before they begin work. What the rich have in the year 2000, the rest have in 2020: personal chefs, stay-at-home moms, six-month sabbaticals. The personal private foundation has become the status symbol of wealth. People magazine features its annual list of the world's most charitable donors. Although tax rates have lowered, the amount of money flowing into state and federal budgets is awesome. Social Security has ample funds, and hundreds of thousands of schools, hospitals, and libraries have newly opened. Ambitious, large-scale public works are all the rage; there's a scandal over whose corporate logos appear on the space suits of the first manned mission to Mars. The majority of Americans are heavily invested in the stock market, so market quotes are as ubiquitous as pop music. The abundance of cheap appliances and gadgets has devalued possessions. The most affluent consumers boast of having less of this or that, but in the end they spend a larger percentage of their income on services and products that attempt to define their identity. In the age of ultraprosperity, it's easy to make a dollar, but hard to make a difference.
Indeed, money gets dull quickly, and that becomes the greatest challenge in the age of ultraprosperity - to make money mean something, or to find meaning outside of money. If we handle prosperity properly, it should focus our attention on the other ingredients of wealth: friendships, relationships, values, character, charity, justice, and thinking about the long-term future. What better use of prosperity than to prepare the wealth of seven generations hence? Whether in fact we'll be responsible with our prosperity in 20 years is too hard to predict. But here, in some detail, are a variety of consequences that seem possible, should this ultraprosperity happen.” See article for full scenario.
The Global Corporation Becomes the Leaderless Corporation.
Author:Byrne John A, Business Week, 08/23/99. Issue 3644, p88, 3p, 1c. Section: 21 Ideas for the 21st Century
The trailblazing corporate superstar will become a thing of the past. And follow-the-leader is a game companies will no longer play. The path to success will be paved by teams made up of the best and the brightest, with their egos checked at the door. Success will belong to companies that are leaderless--or, to be more precise, companies whose leadership is so widely shared that they resemble beehives, ant colonies, or schools of fish. The Leaderless Corporation: “Companies increasingly adopt work groups with no designated leader. The trend intensifies - future generations of people getting to the top with more team experience--and being more willing to use it once they get there.' More and more, CEOs like Cisco empower those directly under the top with greater autonomy, because the CEO can't possibly keep up with every detail of the work. In the 21st century, the all-powerful CEO may not be powerful at all. Companies that thrive will be ``led'' by people who understand that in business, as in nature, no one person can ever really be in control.”
Future Marketplace: Consumer Heaven?
Author:Jennings Lane, Futurist Nov/Dec 97, Vol. 31 Issue 6, p9, 3p.
Describes the society foreseen by Edith Weiner and Arnold Brown where emotion and motility are the society's dominant characteristics. His article outlines the types of jobs seen in the future; how income is spent; how products and services will reach customers.
Future Marketplace: Consumer Heaven? – Witness Rise of the “Emotile” Society. “Emotion (a heightened concern for personal well-being) and motility (fast movement and rapid change) will be future society's dominant characteristics. This is driven by: (1) Work: Where will tomorrow's jobs be? People will increasingly opt to become service providers (guides to information sources, personal consultants, and freelance specialists) rather than pursue traditional roles as long-term salaried employees. This is partly because growing market instability in the Emotile Era will make old concepts like job security and company loyalty impractical and partly because workers' own focus on "personal well-being" will make them less willing to commit themselves to long-term relationships of any kind-including those with employers. (2) Markets: How will people spend their incomes? The key word is "edutainment." Tomorrow's products must not only do their jobs well, they must aggressively draw customer's attention. And (3) Methods: How will products and services reach customers? Their answers are both suggestive and unsettling. Growing computerization will lead to major changes in how goods and services are produced, advertised, selected, and delivered. High-speed communications could make currency trading and other information-dependent transactions too fast for the human brain and even make wealth itself less tangible. "Embedded systems" of built-in computer chips will make consumer products of all kinds, from cars to vacuum cleaners, able to control their own performance in detail and even communicate with others (perhaps automatically summoning a technician on sensing that some component is about to break down). Computerized manufacturing methods will make personalized products as affordable as mass produced items. As a result, there will be fewer stores stocking "ready-made" consumer goods. Instead, customers will select from simulations of many styles and models that are modified to their exact specifications in advance and delivered to them as needed.”
Opportunities in the Emotile Era: “Health care, genetic engineering, preventive medicine, anti-aging foods, "cosmeceuticals"; brain mapping; cosmetic surgery; rehabilitation; diet and nutrition; exercise spas; memory enhancers; biosensors; sensory augmentations; sunscreens; insurance; food and water monitoring, will experience enormous growth. Personal services: Vacation planners, personal entertainment programmers, personal editors, personal home organizers, personal beauty specialists, personal pet companions, personal wardrobe consultants, educational consultants and counselors. Financial security: Services and programs for retirement planning, unemployment financing, career retraining; services aimed at the financial needs of single women, including widows and divorcees; long-term care programs for the elderly. Personal security and safety: Monitoring and sensing services, protection services and devices, private communities, private education, encryption and espionage equipment, paramilitary services, environmental cleanup companies. Religion and spirituality: Scriptures (including interpretation and enactments), spiritual fiction, faith and emotional healing, guidance in ethics, schools of philosophy, cults, ethnic apparel, search for "self," human-rights activism, stewardship activities, marriages of Eastern and Western thought, survival leisure and travel, 12-step programs and support groups.”
Manufacturing in 2020.
Author: Morley Richard E., Book Review: 2020 Foresight Fortune 11/08/99.
Manufacturing's future includes adaptive software, village factories--and humans in control.
The Technology Machine: How Manufacturing Will Work in the Year 2020: includes adaptive software, village factories--and humans in control. Fifty years into the computer revolution, they tell us, manufacturing's transformation from the Industrial Age to the Digital Age is only now taking effect. Factories run increasingly on information in the form of embedded silicon and software. This potent combination is evolving toward the Technology Machine, the authors' name for the factory of tomorrow, in which "intelligent systems will supplement human management." The Technology Machine's software, they say, will include complex adaptive systems that "will cease to be a problem." Software no longer a problem? That prediction alone is bound to bring a smile to many a plant manager.
The authors delve into today's chaotic battle between suppliers of costly, large-scale enterprise resource planning systems and upstarts trying to exploit those systems by adding capabilities such as advanced planning and scheduling. From this chaos, predict Morley and Moody, will emerge software to span the enterprise and its suppliers. It's not impossible. Innovators like Bill Fulkerson of Deere & Co. have put to work so-called genetic algorithms—Deere can now automatically schedule production for any of more than six million combinations of options on a seed planter ordered by a customer. As use of such systems spreads, predict the authors, the Technology Machine will take on attributes of an evolving biological organism.
The other dramatic change Moody and Morley forecast is a return of the village factory. "Everything will be produced in small, fast replication centers" that will be controlled via the Internet. "Imagine pulling up at your local Home Depot and ordering a Caribbean-blue Jacuzzi. In less than the time it would take to pick out ceramic tiles and fixtures, the tub would be molded and ready for pickup at the [local production] cell." Is this notion of reviving the village factory nostalgia or Nostradamus? Probably a bit of both. The Jacuzzi could happen. But your car assembled at your dealer? That strains credulity.
Tomorrow's best factories, say Morley and Moody, will be more like quiet, clean-room labs than clanking assembly plants. Where the experts to staff and manage them will come from is a major question. The authors rightly bemoan the lack of university training of manufacturing specialists. But they see a bright future in which humans will control the Technology Machine and not the other way around.”
Author:The Forbes Group, Island Press, 1998.
The Forbes Group analyzed an underlying assumption of three global scenarios impacting capitalism and economies worldwide. Lack of faith in government and serious declines in voter participation as in the US during the nineties, leads to government dominated by special interests that tend to further alienate voters. It is generally felt that the old and familiar institutional frameworks that held the world together after World War II are not up to the task of managing the “triple revolution” that is changing the world: technological revolution that is transforming the world into an information society; an economic revolution, as communism and managed economies give way to increasingly unfettered capitalism; and a market-driven world, and a political revolution, replacing dictatorships of the right and the left with young democracies. The joint impact has shattered the institutional framework of the world forever.
Scenario 1: Institutional Decay:“The bureaucratic desire for self-preservation prevents reform. Without reform, institutions become overwhelmed worldwide. Existing institutions, though weakened, have enough political strength to derail most reform efforts. Resistance hardens around the limited self-interest of the institutions themselves and those who are dependent on them. This response is not sustainable in the long run, however, and leads eventually to institutional collapse and a power vacuum in society. This slow rot is similar to the process that produced the final collapse of the Soviet Union and Eastern European communism. Unable to accept their own limitations and failures and change with the times, the Communist parties adopted a siege mentality that led to their costly and sometimes bloody destruction.” (Did the capitalists get the answer right or did both schools get the question wrong?)…”
Scenario 2:Baling Wire and Chewing Gum:“This scenario assumes that the self-preservation instincts of western institutions result in some constructive responses to the radical changes by the turn of the century. This happens because western governments have a tradition of at least pretending to respond to popular concerns. But these reforms are concessions grudgingly made only to assure the preservation of the institutions, not to actually solve the problems. Under this scenario, change is superficial and shallow, the proverbial rearranging of the deck chairs on the Titanic. Some individual institutions may indeed disappear under this scenario. For example, the Conservative parties in Canada and Britain or the Democratic Party in the U.S. might ultimately follow the Communist parties of Eastern Europe into the ash bin of history, but national party structures remain the prevailing form of political organization. To defend national sovereignty while appearing to respond to globalized issues, weak international institutions such as the World Trade Organization or the UN are reorganized but essentially preserved in their current form...”
Scenario 3: Creative Destruction:“ The final scenario assumes that early 20th Century economist Joseph Schumpeter was right. Every product, market, industry, nation or institution moves through a life cycle of creation, growth, destruction and replacement. Today's institutions are either circumvented or replaced by new institutions more able to develop emerging technologies and adapt to changing political climates. There are many parallels for what is happening. Factories replaced cottage industries. Farm machinery brought corporate farming and the transformation of the United States from a rural to an urban society. The civil rights movement and major social and economic change led to the transformation of the Old South from a Democratic to a Republican stronghold. World War II brought the end of worldwide colonial empires…” (Are the rapid changes in global communications, information management, government and trade as significant? Maybe.)
World Boom Ahead: Why Business and Consumers Will Prosper.
Author: Knight Kiplinger, Kiplinger Books ISBN: 0938721550 October, 1998.
In “World Boom Ahead,” Kiplinger provides a positive vision of the global economy of the future. His belief in a steadily improving human condition and belief that a dramatic improvement in living standards lies just ahead is a bright spot since he writes so plausibly. He believes that intelligent organizations can navigate through turbulent times and the accelerating pace of change. In terms of change, 1997 marked the year that would define the millennium. In that one year, the world was treated to an amazing array of developments in technology, world affairs, and business that in an earlier time, would have constituted a whole decade of change, but crammed into a year: near-collapse of Asian economies followed by expensive international rescue; western corporate mega-mergers and invasion of the east; Indian and Pakistani nuclear testing and mounting belligerence; rebirth of U.S. antitrust police; new miracle drugs; impact of Galaxy IV satellite malfunction worldwide; for-profit venture to decipher the human genome in competition with government; the reality of cybersabotage on every level. Kiplinger points to the wisdom of scenarios, as the following all contain elements of plausibility and are set against his positive vision as a way to gauge the contrasts and work toward avoiding these worlds:
Scenario 1. Severe Overcapacity and Deflation: “The growth in world manufacturing capacity will be so great, especially in the developing nations, that even rising consumer demand cannot possibly keep up. This will lead to aggressive dumping of exports, price cutting, the raising of trade barriers, general deflation, shrinking output worldwide and declining real wages, especially in the advanced nations...”
Scenario 2. “Hot Money” Chaos:“Uncontrollable flows of capital will surge in and out of world economies, especially emerging markets, destabilizing currencies and causing wild swings in production and living standards. Currency and stock speculation will run amok. A series of serious national and regional recessions will infect the entire global economy, causing worldwide slumps of long duration. The rescue resources of the advanced nations, funneled through the International Monetary Fund, will not be sufficient to shore up all the economies in need of help at one time...”
Scenario 3. Burdensome Aging Populations: “About 15 or 20 years from now, the advanced nations, with their low or negative population growth (including even China by then), will be groaning under the social-service expenses of their aging populations. A mass of retirees will have to be supported by a proportionately smaller group of workers, pushing taxes up and diverting economic resources from investment to consumption. What’s more, stock markets will decline as seniors cash out to cover their living expenses...”
Scenario 4. The Malthusian Nightmare: “ Soaring populations in today’s “Third World” will outstrip the world economy’s capacity to support them with food, water, fuel and jobs. This will lead inexorably to resource depletion and soaring prices, famine, out-of-control urbanization, environmental degradation and attempted mass migrations of poor people into advanced nations, where they will be unwanted but sometimes needed to fill labor shortages...”
Scenario 5. Four Horsemen of the Apocalypse: “The biblical scourges—famine, plague, conquest and war—will recur as they have throughout history, but in more-virulent forms. Populations will be decimated and living standards compromised by antibiotic-resistant bacterial and viral infections, some of them trans-species infections like AIDS. Raging nationalism, ethnic and racial conflict will be as devastating to life and material well being as communism and fascism were in this century. New kinds of tyrannies will subjugate large portions of the globe. Warfare will be made all the more terrible by the use of nuclear, chemical and biological weapons…”
The Silver Lining of Global Imbalances.
Global Economic Forum, The Latest Views of Morgan Stanley Dean Witter Economists. http://www.ms.com; headed by Stephen S. Roach, chief-economist and director of Global Economic Analysis, 1999.
Stephen Roach, chief economist and director of Global Economic Analysis, writes the latest views of the economists at Morgan Stanley Dean Witter, one of the most prestigious financial firms in the world. With America the sole locomotive of a dire world, there has been concern about a destabilizing endgame dominated by the US balance of payments crisis (while Japan and Europe enjoy a surplus). Such disparities in balance of payments among the world’s three major trading blocs plus the US emerging as the world’ s importer of first and last resort makes great fodder for some interesting global economic scenarios because of the dichotomy - a domestically driven US economy that has spawned externally driven growth elsewhere in the world. Stephen S. Roach The key question is, is such an outcome sustainable? Is the world fed up with ever-widening current account imbalances? Morgan Stanley proposes a scenario of global healing.
Scenario: Global Healing:“The dollar continues to hold, rising against the yen but falling a bit against the Euro at the turn of the century. Currencies are really just the measure of the degree of attractiveness of one asset against another. With Japan in a liquidity trap and the new European Central Bank having to take some time to earn credibility, threats to the dollar are unlikely to happen. The global imbalance may in fact, have a silver lining, riding a wave of global healing - a world that is willing to wait it out. It would be a transition to a more synchronous outcome for the world economy at the turn of the century, and likely to be a major fundamental supportive force for the next decade. In “Global Healing” the American consumer will then cease functioning as the world's sole surviving locomotive and global current-account imbalances will begin to move back toward a more stable alignment. History will undoubtedly treat the gaping US balance-of-payments deficit quite kindly. The international shortfall could well turn out to be America's ultimate bill for financing the recovery of a world in crisis. But this same "external leakage" -- which kept a 4.3% increase in 1998 real GDP from turning into a 5.5% gain -- has also served the useful purpose of preventing a serious overheating of the US economy…”
Two Scenarios for 21st Century Organizations.
Sloan School of Management at Massachusetts Institute of Technology (MIT), 1997.
In 1994, the Sloan School of Management at MIT inaugurated a multi-year research and education initiative called "Inventing the Organizations of the 21st Century." One of the key activities for this initiative has been developing a series of coherent scenarios of possible future organizations. Scenario planning was chosen as one of the key approaches for the 21st Century Initiative, since it provides a structured methodology for thinking about the environment in which future organizations will operate and the likely form those organizations might take. This paper describes the results of the scenario development activity to date and suggests directions for future work. Some areas of driving forces discussed were: technology, human aspirations, globalization, complexity, and demographics (in particular, center of gravity of world population and wealth shifting away from North America and Europe). An uncertainty that emerged in the discussions of the Working Group most often was over the size of individual companies. Will organizations in the future be much larger, much smaller, or not very different in size from the organizations we know today?
Scenario 1. Small Companies, Large Networks(focus on how work might be organized in ever-shifting networks of small firms and individual contractors): “Imagine that it is now the year 2015. A world of fluid networks for organizing tasks and more stable communities. The corporation of the late twentieth century was just a transitional form; but in 2010, nearly every task if performed by autonomous teams of one to ten people, set up as independent contractors or small firms, linked by networks. Work is ad hoc. Automobiles, for example, would be designed by a coalition of hundreds of competing firms that are autonomous and self-organizing. Authority is not so much through command channels as teams, especially in areas demanding innovation. Since the contractual life would be lonely, independent organizations are used for social networking, learning, reputation-building and income smoothing...”
Scenario 2.Virtual Countries:(large vertically- and horizontally integrated firms; pervasive role of firms in employees’ lives; employee ownership of firms; employee selection of firm management). “Imagine that it is now the year 2015 … The huge global conglomerate has emerged as the dominant way of organizing work from cradle-to-grave by providing income and job security, health care, education, social networking, and a sense of self-identity. Organizations are as powerful and influential as nations. People are defined not so much by geographic location as they are by the company. Employees own the firm in which they work; just as the modern nation states ultimately turned to democracy, many of the corporations of the twenty first century have moved to representative governance…”
The World Economy in 2020.
OECD Observer, April 1998.
Using a computable ‘general equilibrium’ model known as the ‘Linkages’ model, the OECD Development Centre designed two contrasting visions of the world economy to the year 2020. The models incorporated a fundamental high-growth future verses a low-growth future relative to the effects on trade, production and employment patterns, on food and energy markets, and on the global environment. The most significant trends seen is the flourishing two-way trade between OECD countries and non-OECD countries and the increasing capital flows to non-member countries such as Brazil, China, India, Indonesia, and Russia, known as the “Big Five” - already becoming substantial importers. Both projections assume that basic resources (population and natural resources) and behavioral relationships will remain broadly similar in the future.
Scenario 1. High Growth Worldwide: “The vision presented here is an optimistic one, and if realized, could provide the means to tackle current and future challenges—not least poverty, environmental degradation and aging. Trade opportunities expand as the liberalization of trade, falling transport and communications costs, and increased international mobility of capital could work together to bring about a further opening-up of economies. The benefits from the global mobility of capital accrue from a more efficient allocation of world savings to the most productive investment opportunities and the possibility of smoothing consumption by borrowing or diversifying abroad. Under the assumption of high growth, world agricultural production would expand at roughly the same rate over the next 25 years as over the past two decades, with productivity improvements contributing most of it. However, one of the major worries raised by the high growth projection is its environmental implications…”
Scenario 2. Low Growth Worldwide: “The OECD vision of this world is not so much an antithesis to positive structural forces that spawn high growth, successful scenarios, but rather, slower progress with policy reform in OECD and non-OECD countries - with less trade liberalization and will less rapid advance on domestic policy reforms, not least in fiscal consolidation, removal of domestic subsidies and structural policies - could result in lower (perhaps much lower) growth rates. The assumption of the “virtuous circle” of growth is very strong in both scenarios, as the number of forces driving developments in the world economy, chief among them demographic change, technological innovation, international trade and financial liberalization - how these forces intertwine has prime importance to providing a framework for long-term planning in OECD economies…”
The Futures of American Business.
Author:Peter Schwartz, Lawrence Wilkinson, Sean Baenen. Journal of Business Strategy, Nov-Dec 1997 v18 n6 p40(9).
By considering possible future developments that stretch the bounds of plausibility, business organizations are better prepared to deal with the uncertainty and unconventional risk that may come their way. Four highly diverse scenarios for American business are presented to help companies plan for an uncertain future. Every scenario is accompanied by a list of what companies can do to prepare.
Scenario 1. Changeover and the Long Run:Predicts business turbulence and the rise of flexible enterprises. A world characterized by * Ten more years of turbulence as the world economy continues its transition; * Flexible enterprises playing in fluid markets "December 2007: Remember how confusing things used to be for businesses in the 1990s? The pace of change was outlandish. Technologies continually remade themselves, markets around the world continually redefined themselves, and industries continually reshaped themselves. No organization was immune from radical change, and there certainly wasn't much in the way of sure bets. Well, nothing's changed. Those who found the 1990s a confusing time have found the early years of the 21st century to be no different. The world continues down a path of economic and social transition that will determine the way all of us work, live, and play for the next several decades. Problem is, nobody is sure when that decision is scheduled be handed down, and there are still no clear indications of who will be making it. Every time Microsoft, for instance, seems to have its thumb over the computing industry, something else comes along to change the rules of the game…"
Scenario 2. The Long Boom:"A world characterized by * Two decades of sensational economic growth fueled by infrastructure growth and consolidation; * Organizations competing in truly open markets December 2007: Wired, the world's leading news magazine, recently published its yearly "Numb Minds Awards." With the Dow Jones industrial average crossing the 18,000 mark in September this year, the awards were given to various pundits that had a decade prior predicted the decline of America - indeed, of Western Civilization. It seems funny, almost. In the 1980s and 1990s, we heard endless diatribes about how the world was falling apart and how much more difficult our children's lives would be from our own. So said many poets, politicians, and scholars. In fact, the turbulent '90s were the first stages of an economic boom that has lasted longer than any in history. And it shows no signs of ending. The world's economy has essentially doubled during the past 12 years, bringing an increase in prosperity for billions of people. Today, we are riding the waves of what many believe to be at least a 25-year run of a greatly expanding economy…"
Scenario 3. GlobalPalisades:A world characterized by * Highly fragmented world markets; * Widespread scaling back of formerly multinational companies December 2007: Many of those who received their masters of business administration degrees in the 1970s found themselves trained for a business world that for all intents and purposes no longer existed by the time they were entering the ranks of senior management in the 1990s. Business schools, which needed to update their curricula to reflect the new era of the networked economy and global markets, gradually retooled to churn out the new breed of executive for the 21st century. It wasn't long before this millennial elite also found themselves operating in a world that was much different from the one for which they had prepared. After almost two decades of hope, the digital revolution never came. Throughout the 1990s and early part of this century, it was one new innovation after another with no sign of the lock-in that so many had hoped would finally come. Each new machine or protocol was expensive and obsoleting, and none of them worked together. By 2003, the Internet seemed to have no real nutritional value, and advanced networking technologies were seen as equipment that could transmit money from corporate coffers to vendors but could do very little to change your life. All of the squabbling over standards and shareholder return in the '90s and early years of this century made technology complex and just plain expensive - to develop, to acquire, and to deploy.
Scenario 4. Wild Card Scenario: Wet, Arctic, and Blue:A world characterized by * Fundamental shifting in the global climate; * An incipient change in the locus of industry and tenor of world politics. Wild Cards are those seemingly sudden developments that have the power to change the outcome of the entire game beyond all recognition. Because Wild Cards are so uncertain, it's not practical to count on their arrival. As such, they are not futures we plan for, but against. During the 20th century, and particularly the past 20 years, Wild Cards (the quick fall of communism, increasing number of natural disasters, and the rise of the Internet and its current concomitant economy, to name a few) seem to have been occurring with increasing frequency and increasing importance. December 2007: The world today is subdued by a profound global climate that can essentially no longer be predicted. What most of us believed was simply another inconvenient El Nino the winter of 1997-98 turned out to be the precursor of large-scale climate shifts that have left weather patterns nearly impossible to forecast from year to year. The only thing we do know is that it will never be the same.
New Organizational Forms: The Strategic Relevance of Future Psychological Contract Scenarios.
Author: Paul Sparrow; Cary L Cooper, Canadian Journal of Administrative Sciences, page 356-371, December 1998.
This paper discusses a number of processes and transitions that have dominated the world of work in the 1990s, namely downsizing, restructuring, and privatization. It builds on the work-leisure literature of the 1960s and psychological contract literature of the 1990s to identify four possible future scenarios for employees:
Scenario 1. The Self-Correcting Animal: “Equity theory posits that the main individual response to an inequitable employment relationship is job dissatisfaction and noncompliant behavior, i.e., employees re-establish feelings of equity by altering either their inputs or their outcomes. Low job insecurity has generally been found to be positively associated with these two outcomes, although the relationship can be moderated by factors such as the level of work-based support and the type of occupation. Those who have always worked in jobs that are insecure have less psychological attachment to lose. We should expect to see some significant changes in outcome measures. However, researchers taking this first stance note that the little empirical research that has directly tested predictions about the psychological contract indicates that people operate as self-correcting animals. This position states that the contract is more stable than many make out, breach of contract is overstated, work and leisure activities can compensate for each other, and the contract therefore operates as an influenceable state of mind…”
Scenario 2. Reconfigured Labor Market Diversity: “In this scenario, changes in the psychological contract are again assumed to be relatively low. We still witness high levels of continuity in behavior and relatively low breach, and any observed changes in behavior also prove to be temporary. However, the contract is assumed to operate more as a trait, not as an influenceable state of mind. Moreover, work and leisure dynamics spill over into each other, and some people therefore pursue high work intensity or variety patterns, while others seek the opposite. Under this scenario individual difference is once more an important predictor of behavior. Continuity is again evident. The view of downsizing as refocusing on the need to reveal, analyze, and predict current patterns of diversity in employee behavior is merely the continuation of a long tradition. Guest (in press) drew attention to the work in the late 1960s (Sofer, 1970; Williams & Guest, 1971) and the 1980s (Scase & Goffee, 1989) on diverse work orientations and career anchors, and the desire of many managers to reduce or control their level of engagement in the employment relationship.
Understanding the new patterns of behavior will lead to a redrawing of the current contours of internal labour market behavior. The challenge is to reveal the new contract-as-trait patterns, because they will form a new basis for diversity of behavior within organizations. Generational patterns might be expected, whereby a small group of individuals from the babyboomer generation (now middle-aged) and those nearing retirement feels betrayed by the decline in employment security and shows an immediate negative adjustment. Younger employees may not feel the need to make much correction in their behavior. Although this diversity might pattern across generations, in reality it may be more subtly linked to differences in personality, value, and internal career anchors.
Scenario 3. Limited Capacity:third scenario assumes that there are limits to human capacity that may be breached by changes in the intensity of employment. The main parameters of this scenario are not particularly new. In 1994, the U.S. Human Resource Planning Society set up the State-of-the-Art (SOTA) Council to consider what the main change drivers and challenges would be at the millennium (Eichinger & Ulrich, 1995). Not surprisingly, it predicted that tensions would be caused by competitive changes associated with globalization and internationalization. At that time, the requirements of flexibility demanded structural change (rationalization, downsizing, and delayering) and horizontal management techniques. SOTA predicted the need to build trust and confidence (so individuals would believe what managers say) and the need for organizations to become "boundaryless" (with information and ideas moving across hierarchical, horizontal, and external boundaries effortlessly). The lack of flexibility was seen as a problem of employees having limited capacity for change. The limited capacity scenario suggests that new forms of work will affect the average level of well being. This concern is reflected in recent research examining the link between the effects of work hours and health. Evidence that many employees are now working longer hours to cope with increasing workloads, job insecurity, and pressures for improved performance is clear, and the success of many atypical forms of employment in terms of their impact on productivity and employee well-being has yet to be fully evaluated (Wallace & Greenwood, 1995).
Scenario 4. New Rules of the Game Scenario: the fourth scenario, the change in motivational drivers becomes permanent. The contract is found to be a state and not a trait. It is therefore amenable to change and influence, and the changes experienced are more radical. In particular, changes in organizational form have reconfigured jobs, and the roles of several job characteristics that were previously shown to be important in core OB relationships are now altered. New organizational forms have resulted in new job attributes such as physical working conditions, levels of vigilance, shift work, long hours, new technology, responsibility levels, accountability, time spans of discretion, and degree of autonomy and control. Change may have been more radical than we believe. The new rules of the game scenario assumes that the consequences of this is not only a reweighting of the psychological outcomes associated with these factors but also new and as yet little understood relationships.
Reconfigured jobs create a new context that invalidates previously assumed relationships. That we need to question assumptions more radically is demonstrated in recent examinations of the work-strain relationship. Sparks and Cooper (1997) examined data on over 7,000 employees and observed a decrease in the relevance of two core constructs-job demands and job control (range of decision-making freedom)-in predicting psychological well-being. Factors such as work vigilance and responsibility, which are by-products of the new organizational forms, have increased in importance. Moreover, the impact of all work predictors has become much more situation-specific: Specific factors are important for specific occupations. Linkages that were assumed to exist between work characteristics and psychological outcomes such as work strain may be reconfigured.
A Vision for the World Economy - Openness, Diversity, and Cohesion.
Author: Robert Z. Lawrence, Albert Bressand, Takatoshi Ito. The Brookings Institution, Washington, DC, 1997.
This book and the project, “Integrating National Economies” focus on the tension between two fundamental features of the world at the end of the twentieth century. First, the world is organized politically into nation-states with sovereign governments. Second, growing economic integration among nations is eroding differences among national economies and undermining their autonomy. As the twentieth century comes to a close, three roads to the economic future lie before economic policymakers: reliance on the historical policies of reducing at-the-border trade barriers, the agenda of shallow integration; harmonizing and reconciling national differences, the agenda of deeper integration; or reversing previous liberalization and reasserting national autonomy. These approaches suggest three scenarios. “In the world of the Invisible Hand, nation-states would maintain open borders for trade and capital but engage in little international coordination. Competition in trade and international capital markets would produce automatic pressures for harmonization. Under an alternative scenario, Global Fragmentation, nations would resurrect protective barriers. Finally, major economies such as the United States or the European Union may impose Imperial Harmonization, under which they would force smaller nations to adopt designated standards and regulations. The most pessimistic of these scenarios is Global Fragmentation. To the extent that it is realized, forces of protectionism and nationalism would undermine the world’s ability to maintain open economies and global cooperation, with costly consequences. Such fragmentation would threaten the prospects of both emerging and developed nations. Emerging nations would back away from the outwardly oriented policies necessary for sustained growth. Developed nations would sacrifice opportunities for economies of scale and growth through specialization. Imperial Harmonization is a less pessimistic vision, but it would increase global political disparities. It would permit only some nations to fully realize the gains from international cooperation and would suppress diversity. A world governed by the Invisible Hand is a more optimistic vision because it would permit national diversity and encourage harmonization through market pressures. Without international governance, however, opportunistic national behavior could be expected, some problems would prove insoluble, and the least fortunate nations would be totally neglected.”
Future Global Capital Shortages - Real Threat or Pure Fiction?
Author: Wolfgang Michalski, Riel Miller and Barrie Stevens, OECD Secretariat, Advisory Unit to the Secretary-General. Organization for Economic Co-operation and Development, 1997.
There had been a significant decline in total saving in the OECD area as a whole over the past 30 years. According to the authors, the average gross national savings rate has fallen by about 4 percentage points of GDP. The fall in net saving has been even sharper - from around 15 per cent of net domestic output during the 1960s to its current level of about 7 to 8 per cent. The decline is visible at all levels - national, government, private and household. The fall in saving across Member countries has been paralleled by a general decline in investment rates, more pronounced in net than in gross terms, concentrated largely in the private sector. The authors present a highly plausible worst case scenario of the aged dependency ratio that drives a rising demand for public funds.
Scenario: Rising Demand for Public Funds in OECD Countries: The authors assert that by 2010, public demand for funds rises to high levels in the OECD countries. All other government expenditures remain constant, but social expenditures rise roughly in proportion to the dependency ratio. Old age pension replacement rates are fixed at their 1997 level, so pay-as-you go pension expenditures are exactly proportional to the old age dependency ratio. The increase in public health expenditures is driven by age-specific health costs. “ Microeconomic evidence in Japan and in the United States shows that age-specific health expenditures increase almost exponentially with age, so this part of social expenditures increases even faster than the old age dependency ratio. On the other hand, population aging is accompanied by a decrease in the proportion of children, reducing social expenditures for schools and family transfers. However, this offsetting effect is relatively small, in addition to which the OECD estimates probably exaggerate social expenditures past the year 2010, because they rest on rather high fertility assumptions. The rise in the dependency ratio translates into an increase in the public demand for funds as long as age-specific social expenditures and tax rates remain as they are now.” This is a worst-case scenario in terms of government deficits. The lesson of the scenario is that any forecast of the demand for funds is conditional on public policy changes in reaction to population aging. Spending cuts in entitlements programs, either directly by reducing replacement rates or indirectly by reducing eligibility and tax increases for the working populations, will decrease the demand for funds relative to the worst-case scenario.
Economic Evolution and Structure - The Complexity on the U.S. Economic System.
Author: Frederic L. Pryor. Published 1996.
This book provides an analysis of the economic system in the U.S. In one chapter, the author sketches scenarios of the future of capitalism, relative to the U.S. economy. Pryor approaches the problem in three steps: first, by investigating how the current system is performing and to ask whether the projected performance will be sufficiently poor as to force a change in the economic system; secondly, to explore directly, the sources of systemic change, whether internal or external. For this purpose, the author isolates four key changes: increasing structural complexity, increasing internationalization, decreasing social cohesiveness, and a re-energized “spirit of capitalism”; finally, linking these sources of systemic change to particular scenarios. The author concludes that major changes in the organization and control of production are the most far-reaching system changes that could occur in the coming decades. Three scenarios have some probability of occurring.
Scenario 1. Finance Capitalism. “Third-Party capitalism” provides a label for several different types of capitalism in which institutions, rather than individual owners of the means of production, exercise major decision-making powers in the crucial productive institutions. Finance capitalism represents the most likely form that such a third-part capitalism could take.”
Scenario 2. Atomic Capitalism. “This is the label for an economy where production is carried out in relatively small enterprises and where one type of structural complexity, namely the separation of ownership and control, is reversed. It represents almost the antithesis of finance capitalism.”
Scenario 3. Remodeled Capitalism. “This is the label for an economic system that had adapted to the increasing structural complexity. It reflects an enhanced valuation of human capital through a greater use of skills and a greater education of the labor force. Among other things, production would increasingly shift toward those sectors in which the United States has a comparative advantage.”
An Anticlassical Political-Economic Analysis - A Vision for the Next Century.
Author:Yasusuke Murakami. Stanford University Press, Nov. 1996.
The substance of this book is an attempt to develop a partial theory that the authors call an anticlassical political-economic analysis. Of interest is the author’s use of a biological framework for discussion and presentation of a scenario of a new international system that is rule-based. A Scenario for a New International System: “What would an international system dependent on a rule-based approach be like? The empires of colonialism and the quasi-empires of socialism were clearly grounded on justice-based approaches. What form could liberal democracy between states take? For comparison, let us imagine the extreme case, in which a world-state has emerged and national boundaries have lost their significance. This world-state would perhaps be governed by an “ideal world parliament,” copying a typical parliamentary democracy. In this democracy, everybody would have an equal right to vote, and those who lived in particular regions would not have special privileges (such as the right of veto enjoyed by members of the UN Security Council). In this model the democracy between countries would be the same as the democracy among people.”
The New Capitalism.
Author: William E. Halal. John Wiley & Son. July 1986/486p. Three scenarios of U.S. capitalism scenarios to 2000.
The world is recognizing and affirming the ideals of democracy and free enterprise because they offer the best means for adapting. The best combination is a balance of the two, exemplified in Democratic Free Enterprise, described by the author. Key elements of the new capitalism include: smart growth - combining profitable business with public service; market networks - fluid organizational environments; participative leadership - profit and worker ownership; multiple goals - profit no longer the central principle; and strategic management - issues management at the heart of strategic change. Professor Halal concludes with three scenarios.
Scenario 1.) Corporate America: the Reagen influence to get America back into Laissez faire economics was maintained through the 1990s. By 2000, big companies and multinationals literally reigned. “Fierce competition prevailed for awhile to create a flurry of efficient innovations, but, as the economic transition matured, mergers and acquisitions consolidated most industries into a few large corporations.” Big corporations manage schools and universities because education has become increasingly critical for running a complex technological society.
Scenario 2.) Regulated America: most aspects of life are regulated by government as America returns to an “America that Cares.” This welfare state is a more secure and fairly well administered society, but the promised gains remained illusive. Reforms were made, but only by replacing business mega-corporations with federal bureaucracies.
Scenario 3.) Democratic Free Enterprise America: a major populist movement targets big business, which becomes a major political issue. The role of business is then redefined by a coalition of centrist politicians and business executives. The movement leads to various changes that redefine much of the economic system, such as agreements to automate smokestack industries while providing worker- training on new technologies.
A Visit to Belindia
Author: Frederick Pohl. Chapter from “The World of 2044 - Technological Development and the Future of Society” edited by Charles Sheffield, Marceto Alonso, and Morton A. Kaplan. Paragon House, St. Paul, Minnesota. Global economy scenario to the year 2044.
One of a collection of scenarios from various authors looking to the year 2044. Key trends in A Visit to Belindia include the widening of the have-have not gap, slow growth in the advanced industrial nations and irresponsible government spending. This pessimistic scenario depicts the widening of the have have-not gap worldwide, and the term ‘Belindia’ popularly describes this condition: a small number of well-to-do classes having the same standard of living as in Belgium while the rest of the world lived at a standard similar to India’s in the mid-nineties of the 20th century. Belgium plus India = Belindia.” Belindia is really the whole world now.” The potential of technologies to contribute to economic growth and a higher standard of living stagnated dramatically due to inappropriate government spending on pork barrel projects when there should have been spending on research and development. With such a widening of the have have-not gap at the beginning of the 21st Century, narcotics became the fastest growing industry in the world. With virtually no exploitation of potential technologies to solve environmental problems, by 2044 the ozone layer was almost gone, and throughout the world, a few million lived under protective domes while billions lived unprotected, and, “They didn’t live very well at all.”
The Capitalist World-Economy: Middle Run Prospects.
Author: Immanual Wallerstein, Alternatives: Social Transformation and Humane Governance 14:3, July 1989, 279-288. Three scenarios of the world economy to 2050.
Wallerstein traces the capitalist-world economy and, from the perspective of 1989, the world was in the middle of a period of global economic stagflation that could have meant the decline of US power while Japan and Western Europe were improving their positions. Four possible vectors of historical occurrences for the 2000-2050 middle-run period are described, then, “if all four vectors are correctly estimated, three scenarios are possible”:
Scenario 1.) A story of the struggle for hegemony, pitting Japan/US/China against Western Europe/USSR (or parts of the former USSR), results in a world war by 2050. Scenario 2.) Faced with the exhaustion of the present world-system and the fear of nuclear disaster, this is a story about a world system that consciously reorganizes itself into something else. The world recreates a new structure of inegalitarian privilege. Scenario 3.) A story of the anarchic crumbling away of the world system, generating massive experimentation and massive insecurity, until chaos creates a truly new world order that is relatively egalitarian and democratic.
Business NOT as Usual: Rethinking our Individual, Corporate, and Industrial Strategies for Global Competition.
Author: Ian I. Mitroff, San Francisco: Josey-Bass Publishers, April 1987/194p. Four scenarios of U.S. development into the 21st century.
The author discusses business strategy in a changing world. The book concludes with four scenarios of the future of U.S. corporate and industrial development.
Scenario 1.) Continually increasing prosperity without substantial change or dislocation. This most optimistic scenario assumes that past methods of operation are sound and will lead to increasing prosperity in the foreseeable future. There is no need to change the thinking about complex problems or restructure organizations and industries.
Scenario 2.) Continued prosperity with substantial early adjustment. This is also an optimistic scenario but in a very different way. It’s basic premise is a highly adaptive America, where clear signals of the decline of industry are perceived early enough, so that shifts into new patterns are made (for example, less bureaucratic, smaller, more autonomous companies that can compete more effectively).
Scenario 3.) Late and slow recovery after substantial pain. This scenario is optimistic but also in a different way. It predicts that substantial pain will occur before the United States finally makes the changes necessary to compete in a world economy. That is, many more industries will reach “near death” before the wall of resistance that has been built on past successes is broken down, and they realize that radical restructure is critical to survival, let alone prosperity.
Scenario 4.) Catastrophic decline after severe pain. Most pessimistic. Maintains that by the time the pain has become so great that change is clearly needed, it will be too late. Foreign products and competitors will have made such a dent in US domestic markets, not to mention world markets, that the chance of disengaging their stronghold will be extremely difficult.
U.S. Financial Services in the Global Economy: International Competitiveness and Safety and Soundness.
Author: James D. Robinson III, Vital Speeches of the Day, 56:6, 1 Jan 1990, 176-180. Three scenarios of financial services to 2000.
In a speech given by James D. Robinson, Chairman and Chief Executive Officer of American Express Company on the future of the U.S. financial industry, it was concluded that there were three plausible scenarios. Key trends driving the scenarios are: wealth becoming more widely distributed around the world resulting in a truly global economy; the increasing globalization of financial markets; and increasingly, financial markets becoming a guide to economic policy.
Scenario 1.) Creeping Incrementalism: a continuation of the piecemeal, loophole-driven erosion of regulations and the legislative stalemate that had characterized U.S. financial system reform. This is an “extension of the status quo” scenario.
Scenario 2.) Back to the Bunkers: a world of protectionism on all levels. For example, the re-regulation in the U.S. into distinct financial services industries, and internationally, the creation of trade blocs, which is a very fragile kind of security, vulnerable to market forces finding new ways around artificial barriers.
Scenario 3.) A Positive Future: “open markets that land consumer choice, in which all types of financial institutions can compete with adequate rules of consumer protection, fair play, safety and soundness.”
In the Shadow of the Rising Sun: The Political Roots of American Economic Decline.
Author: William S. Dietrich, University Park PA: Penn State Press Oct. 1991/343p. A global economy scenario to 2015.
From the perspective of 1991, the author considers the various angles of a key trend: Japan’s growing technological and economic mastery. From a U.S. point of view, Dietrich writes a hair-raising scenario called “Pax Nippocina”, characterized by American decline and Japanese world leadership. Japan dominates every leading‑edge industry, and becomes the world’s financial center. Its GNP is twice that of the US, and GNP per capita is four times higher. The Japanese own 40% of US manufacturing assets, as the US (and the EC) is relegated to a third‑tier nation, relying on East Asian high-tech products. Although Japan has experienced problems in their economy, Japan has the potential to rise again. When looking out beyond the 1990s and to the year 2015 or 2025, “Pax Nippocina” is a plausible consideration.
1990 Ten Year Forecast. Institute for the Future.
Corporate Associates Program, Menlo Park CA: IFTF Feb 1990/237p(8x11’). Three scenarios of the business environment to 2000, 2030, 2050.
“A comprehensive view of change in the business environment, divided into three sections: a core forecast of key driving forces in the 1990s, a center section glimpsing the first 50 years of the 21st Century in three scenarios (2010, 2030, 2050), and a discussion of four major issue clusters (consumers/customers, employees/managers, investors, and government).” Future Survey Annual 1990 This “Ten Year Forecast” suggests that the rising tide of social insecurity among middle-aging baby boomers about their economic situation, health benefits, and debt burden. For 2010, the Institute for the Future forecasted enormous growth in middle-class consumers in Latin America, Southeast Asia, and Europe: “By 2010 these areas will have a third of the world’s middle-class consumers, up from 18 percent today.” The “Ten Year Forecast” is proprietary, but there are many excellent forecasts, papers, and reports that can be ordered through the Institute’s homepage at: www.iftf.org.
Wild Cards: Preparing for “The Big One”.
Author: John D. Rockfellow, The Futurist, 28:1, Jan-Feb 1994, 14-19. Three Wild Card scenarios to the year 2000.
Oftentimes a set of scenarios will include a wildcard scenario of an event having a low probability of occurrence, but a very high impact if it does occur. In this article, the author describes three wildcard events from a collaborative report titled, Wild Cards: A Multinational Perspective.
Scenario 1.)Hong Kong Rules China: “In 1997, Great Britain has relinquished control of Hong Kong, but the joke is on China. Hong Kong, Taiwan, and the five special economic zones of mainland China have become the supernovas of the late twentieth century. They have gobbled up the Chinese communist dinosaur and blasted away the possibility of another Tiananmen Square massacre.” By 2000, Hong Kong serves as the main conduit for Chinese exports. Mainland China’s average annual growth rate has stayed constant due to a lack of infrastructure, while Hong Kong’s exports have increased substantially.
Scenario 2.) Europe Goes Regional: by the year 2000, Europe will dismantle the nation-state in favor of strong regional representation in the European Community. The community is still seen as necessary to protect economic and security interests, but the nation-state as an intermediate step in the hierarchy of decision making has been bypassed.
Scenario 3.) The No Carbon Economy: scientists establish that the world’s climate is getting warmer due to rising concentrations of greenhouse gases in the atmosphere. The world experiences more droughts, cyclones, heat waves, etc. Public awareness of the situation grows, bringing with it a greater understanding of the limitations of development based upon abundant and cheap energy.
The Age of Diminished Expectations: U.S. Economic Policy in the 1990s.
Author: Paul Krugman, Cambridge MA: MIT Press, Sept 1990/204p. Three near term scenarios on the US economy.
Key trends in the US economy are described: productivity growth, income distribution, unemployment, the trade deficit, inflation, the budget deficit, trade with Japan, finance, debt in the developing countries. From the perspective of 1990, the author concludes with three scenarios of the U.S. economy.
Scenario 1.) Happy Ending: US growth of productivity at 3% a year leads to a general rise in living standards and defuses the problems of trade and budget deficits.
Scenario 2.) Hard Landing: foreign investors loose confidence in the US, and the immediate impact is the fall in the dollar, or the reverse. “If you want to envision a real hard landing, simply imagine that foreigners face a perceived risk that is not alleviated by a lower dollar, such as fears of expropriation. Suppose that the resulting dollar crash follows a period of dollar stability, so there is no cushion to brake the rise in import prices, and we have the bad luck to stumble onto a third oil crisis just as the dollar plunges. Suppose that the US economy is already having an inflation problem when the crisis hits. What you get is a recipe for a truly disastrous hard landing.” This hard landing scenario can be avoided with good policy.
Scenario 3.) Drift: no radical developments or changes. In the 1990s there will be a growing and ever more miserable underclass, while the middle class probably does better. By 2000 unemployment probably will drift down to 4-5%, inflation will creep up to 7%, net foreign claims in the US will be about 20% of GNP, foreign firms will account for 25% of US manufacturing and 45% of banking, an increasingly unified Europe will have a larger GNP than the US; Japan’s GNP will be 80% or more of the US level, and a world economy that is likely to be less unified due to trading blocs will slow the growth of world trade. This scenario is far short of what used to be regarded as success, but it “now looks perfectly acceptable, and might be regarded as a success.”
Long-Term Scenarios of the World Economy to 2015.
Authors: Andre de Jong and Gerrit Zalm (Central Planning Bureau, The Netherlands). Conference on Long-Term Prospects for the World Economy. Organization for Economic Co-operation and Development. Paris OECD, Aug 1992/193p. Four scenarios on the global economy to 2015.
According to the Central Planning Bureau, The Netherlands, many policy makers in government and business base decisions on their perceptions of the future. Three perceptions of the future - equilibrium, coordination, and free market - were discussed at this conference, and were related to various regional developments in economics, natural resources and the environment, along with the interactions among the driving forces to create four alternative scenarios supporting a long-term study of the Dutch economy, with a focus on the world economy.
Scenario 1.) Balanced Growth: emphasis on economic equilibrium and innovation. This is the most optimistic scenario. An annual growth rate of the world economy is more than 3.5%, which is ecologically sustainable and includes all the major regions of the world.
Scenario 2.) Global Crisis: tensions between trading blocs (Japan‑led bloc is strongest) create a vicious circle of slowing economic growth. This is a “lack of balance” scenario featuring global tension and conflict, slow growth and depression. It examines the damages of ignorance and the challenges of a delayed response to regional and global problems. Drought leads to a worldwide crisis in food supply and global economic recession. How the world may end up in widespread distress with only a possible high cost solution, is examined.
Scenario 3. ) Global Shift: technology is the driving force behind a free market economy. A shift in economic activities takes place from the Atlantic to Pacific basin.
Scenario 4.) European Renaissance: trade blocs slow growth of free market economy. Europe proves to be the best at integrating and expanding its bloc and flourishes. The two most powerful economic blocs in the world are Western Europe and North America. Although they are quite different, both blocks are vulnerable, and their economic performance will have a huge influence on other regions, especially their neighbors.
Long-Term Prospects for the World Economy.
Organization for Economic Co-operation and Development. Paris: OECD, Aug. 1992/193p. Nine near term scenarios on the world economy.
A “Forum for the Future” conference hosted by the OECD in Paris, June 1991. This conference brought together key economists and thinkers from around the world, examining the forces that are likely to drive the evolution of the global economy and its major regions to the year 2000 and beyond. In addition to the summary by Michel Andrieu, Wolfgang Michalski, and Barrie Stevens, the conference provided seven additional papers that included scenarios. Long-Term Prospects for the US Economy, by Maurice Ernst and Jimmy W. Wheeler (Hudson Institute) provided three scenarios of the US economy to the year 2000. US trends identified included: defense and discretionary spending; entitlements such as social security and Medicare; special benefits and subsidies, and general revenues.
Scenario 1.) Central Surprise Free Scenario: GNP Growth ranges between 2.3-2.7% through the 1990’s and to the year 2000. No surprises here; it is a “business as usual” scenario.
Scenario 2.) Virtuous Circle Scenario: overall luck was very good; the combination of good management, especially in the industrial sector, and policy yields 3.2% growth.
Scenario 3.) Slow Growth Scenario: only 1.8% growth. Confidence becomes lost in the “American Dream” and the US begins to loose ground in terms of competing in the global economy. North American Economic Integration, by Wendy Dobson (U of Toronto) provided three scenarios: 1.) Base Case; 2.) Freer Trade (resulting from NAFTA - accelerating economic growth in all three countries); and 3.) Further Evolution (common market or economic union in the longer term). European Economic Integration, by Emilio Fontela (U of Madrid) provided three scenarios: 1.) The Conventional Wisdom Scenario; 2.) The Scenario of Deepening; and 3.) Scenario of Widening.
The Great Boom Ahead: Your Comprehensive Guide to Personal and Business Profit in the New Era of Prosperity.
Author: Harry S. Dent Jr. Hyperion Publishers Jan. 1993/273p. A global economy scenario to 2025.
A Global Boom Scenario. A new world economic order of three trading blocs (North America, Europe, and the Far East), is led by a booming U.S. economy. America’s baby boomers reach peak productive years as the U.S. gains economic dominance and leads the move to customization economies. U.S. information infrastructure and workforce become the best in the world. Mexico rides U.S. coattails to become the Third World country with the strongest growth. Warns that the world needs to prepare for the “Mother of all Depressions” from 2010 - 2025, which could bring the curtain down.
21st Century Capitalism.
Author: Robert Heilbroner. W. W. Norton & Co, N.Y. Sept 1993/175p. Five scenarios of capitalism to the 21st century.
In contrast to stagnant command and control societies, capitalism presents the impetus, challenges, and generates tremendous change in a society. It “thus carries us along into futures that are full of unpredictability, and yet formed and shaped in ways that are far from being utterly unforeseeable.” The author presents the economic theories of Smith, Marx, Keynes, Schumpeter, and Heilbroner as scenarios for the future of capitalism into the 21st century.
Scenario 1.) Adam Smith: a world of economic growth, resource restraints, economic decline from growing population and shrinking resources.
Scenario 2.) Karl Marx: a world of growth with continual periods of economic crisis and restructuring, with labor ultimately gaining control of the economy.
Scenario 3.) John M. Keynes: a world of market driven societies creating lasting underemployment and the need for social investment.
Scenario 4.) Joseph Schumpeter: capitalism will continue to grow through creative destruction, but will ultimately decline from moral decay.
Scenario 5.) Robert Heilbroner: capitalism can grow with the right social investment. Barriers to social investment include the deficit, American tax phobia, and coping with inflationary pressures.
The Post-Nationalist Map: Cartography of Cultures and Economies.
(Special Issue). New Perspectives Quarterly 12: 1, Winter 1994-95/64p. Single copy from the Center for the Study of Democratic Institutions. Two future maps of the 21st Century.
This special issue is devoted to showing that the world in the 19th century was once divided by geo-political relations and has evolved in the 20th century into a new cartography of cultures and economies, and is destined to evolve further into the 21st century. Views included in this issue were: Nathan Gardels (editor, NPQ), Francis Fukuyama (RAND Corp. - Washington), Chai-Anan Samudavanija (Bangkok), Kenichi Ohmae, Jacque Delors, Robert Reich, Riccardo Petrella, Paul Kennedy, Paul Krugman, James Goldsmith, Richard Rosecrance, Hans Magnus Enzensberger, and Riccardo Petrella (EU/FAST).
Riccardo Petrella sketches two future maps of the world system, so vivid that they are scenario like. The first map is a world dominated by a hierarchy of 30 city-regions (the CR-30 replacing the G-7), linked more to each other through telecommunications than by geography; the second map is a global civil society that balances the business world with a global social contract that gives equity to all through a redistribution of wealth.
The Twenty-First Century Organization: Analyzing Current Trends—Imagining the Future. Author: Guy Benveniste, San Francisco: Jossey-Bass Publishers, Feb 1994/310p. Two scenarios of the organization to the 21st century.
The author outlines six trends driving two scenarios of the future of the organization. These trends include: worldwide competition for ideas, highly educated work force, feminization of organizational culture, sophisticated communications, rapid change, and a shift from hierarchy to more egalitarian organizations.
Scenario 1.) New System: in this world, most, if not all people are highly educated and are members of professional organizations that represent their occupation. Individuals are members of Professional Councils, Professional Courts, and Professional Boards.
Scenario 2.)The Firm: in this world, American organizations engage in global business. These organizations are operated on the senior staff professional model, with two hierarchies of workers: senior professional workers with considerable discretion and other professional workers in fairly controlled situations. Credit goes to those who work diligently. Rewards are based on outcome measures. These large enterprises run schools, hospitals, hotels, and restaurants.
The Haves Have Less.
Author: Gaia Young, and channeled to Nichola Lemann. The New York Times Magazine Sept 29, 1996. A labor scenario to 2096.
This scenario plausibly describes the evolution of work into the 21st century. Key trends include the striving for education, high unemployment, and the widening of the have have-not gap. The world of work becomes a “meritocracy”, in which people rise to power and position because of their education-based ability (rather than birth as in an aristocracy). Meritocracy is especially seen in the US. However, populist reaction against the meritocratic elite causes such professions as law and medicine to decline in status, while a quarter of the work force is made up of domestic servants.Top of the Page