Geo-Economics

Innovation Policies & Performance

Not all nations are equal on Innovation performance, as indicated in the GLOBAL INNOVATION INDEX 2018 published by the WIPO.

As summarized by Newsweek, 2050 will be quite different from today: growth and ageing of population, water and food stress, urbanization, etc..., will concur to make our planet quite different from today.
According to demographs, the first half of the 21st century will bear more humans than  cumulated in the whole history of mankind. This will come with major changes such as ageing in developed economies, emerging prosperity for others, environment impacts, urbanization, challenges with energy and food security, the 4th industrial revolution with the big data and internet of things. With this, no wonder that we are entering the VUCA world of volatility and disruptive changes. 
Nothing new, just an acceleration of history, as pictured in this fascinating journey through mankind
Also: Economics is indeed for everybody, as this video testifies!
And this is accompanied by dramatic shifts of the relative influence of Asia and Africa, as captured in the main graph of this article.

The Great Acceleration

We have entered the era of the antropocene: the planet changes are affected by the human activity, and we are now crossing many planet boundaries that may or will affect our ability to maintain a trajectory of sustainable development. This is the Great Acceleration, a concept depicting the  trajectory of the Antropocene . And unless we do something, the BAU scenario (Business as Usual) will certainly lead to an unstability with grave consequences, as described by the revised Report of the Club of Rome  

UN Sustainable Development Goals

The UN has developed a new set of Sustainable Development Goals that should mitigate the potential impact of the changes facing us. The 17 objectives cover a.o.  health, poverty, gender equity, water, infrastructure, education, etc... and are presented in this leaflet

The UN Webpage on this is also providing additional information on on-going events, publications and tracking reports.

Business and Sustainability

The World Council for Sustainable Business Development (WBCSD)  has issued their "Better Business Better World" report analyzing the necessity and immense opportunities for the Business to embark on a more daring path towards sustained development, highlighting that:

- in a post-2008-crisis world, where trust in Business has become thin, running business as usual, i.e. not addressing issues of externalities, air-pollution, climate change, and worsening social inequities, youth unemployment and social erosion in the western world will only accelerate the rise of populism and protectionism, and therefore backlash.

- the ability to embrace opportunities generated by meeting needs for Food and Agriculture, Cities, Energy and Health from the implementation of the Global UN Development goals may soon become a competitive edge for such companies. Globally, this means trillions of $ of opportunities. 

Trends and Forecasts

Many organizations are publishing periodically reports presenting their views on trends and emerging risks. Among the many,
- the DNI, part of the American Intelligence community, has updated their views here.

- the WEF (World Economic Forum) is updating also regularly its views on the Global Risks

Still, quoting Nils Bohr, "Prediction is very difficult, especially if it's about the future." There is a cemetery of unhappy predictions, and in business, this is known as the hockey stick curve (picture): past year was bad, but the future is going to be bright!

Whatever value we give to forecasts, a sure fact is that we have entered into the age of the Great Acceleration, or of the exponential curves for many parameters, 

Global Risks and Trends

The WEF (World Economic Forum is publishing annually its perception and analysis of the Global Risks, summarized here. Their full report is downloadable here. Globally, water crisis, climate change mitigation and involuntary migration are rated first, but the picture differs regionally, with

- migration, unemployment and fiscal crisis on top for Europe

- water crisis, unemployment, social instability and governance for Middle-East and North Africa

- Energy price shock, interstate conflict and governance for Central Asia-Russia

Convergence and Inequalities

Two emerging issues are disrupting the political scenes in developed economies: not enough jobs to secure the well-being of the population, and the rising inequalities. This was materialized by the fact that the average income of the middle class did not grow in the last 2 decades, and in some cases even declined. And failing to address these issues will have a toll on our democracies, with the emergence of populism as a result. This is the new reality from the nineties onward.
The mechanisms for this situation, resulting from globalization, are well described in the highly relevant research of Richard Baldwin' book, The Great Convergence,   presented by him in more details here. Wages are not so much fixed by trade flows, rather than by Knowledge monopoly, and in a time of the collapsing costs of Knowledge transfer from developed to emerging economies thanks to the developments of the ICT (Information and Communication Technologies), a new reality is now emerging: competitiveness is not so much at the level of states, but rather at the level of Global Value Chains, and tariffs will not protect a state anymore. What is much more important is to develop policies that: 

1) address the competitiveness through knowledge, with the adequate investments in research and education, 

2) put in place compensations so that the population affected by disruptions are provided with support to get new opportunities, and 

3) because this will require a strong and effective state, ensuring that proper (i.e. lean and fair) taxation are in place to get the means to achieve all this. 

This should be a way to keep populism at bay, and prevent that over-simplied policies are promoted, ending up damaging the construction of a sustainable, balanced economy, and further elaborated in this article of Foreign Affairs on the liberal order.

Responsible Finance

The debates on digitalisation, sustainability, circular economy and achieving the SDG's is also percolating into the world of Finance. Pension funds and institutional investors are more and more concerned about the impact of their investments. Ethical and Resonsible Investment is the answer to these concerns, and have been captured in the PRI(Principle for Responsible Investment) forum. The SFG (Sustainable Finance Geneva) has also issued a document describing how these trends are originating innovation in the world of finance.