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Expanding influence of East and South

The shift of economic power from the established Western economies and Japan towards the emerging economies in the East and South is set to continue.

timeline and images smallchina
(© Photo by Mathew Schwartz on Unsplash)

Megatrend

A Megatrend is a long-term driving force that is observable now and will continue to have a global impact in years to come

The shift of global economic power from the established, advanced economies in North America, Western Europe and Japan, towards the emerging economies in the East and South is set to continue. China has already overtaken the USA to become the largest economy in ‘purchasing power parity (PPP)’ terms (the theory of PPP being to compare the cost of a 'basket of goods' from one country to another, indicating economic strength).

If the present trends continue, by 2050, Asia will be the centre of the global economy, providing more than 50% of the global economic output, largely driven by China and India. Indonesia and Brazil will be further ‘winners’ from the shrinking of Western economies. Africa is a continent in transformation, with a huge free trade area just put in place and diversification of its economy. Africa will become a larger player in the future global economy.

Strategic autonomy (i.e. the ability of a state to pursue its national interests), populist nationalism and systemic failures of interdependent supply chains have led to a slowdown in the speed of globalisation, and its fragmentation. The pandemic and the war in Ukraine continue to have impacts on many aspects of life - including the global economy and supply chains.  Like-minded countries are collaborating more.

This Megatrend is part of the Megatrends Hub

 

Timeline

The driving forces of the Megatrend change over time. This timeline indicates more established and newer trends that are influencing the future direction of the Megatrend

Timeline Megatrend Expanding influence of the East and South

They indicate a direction of change in values and needs which is driven by forces and manifests itself already in various ways within certain groups in society. 

Future of the international order at a crossroads

After the fall of the Berlin Wall, a dominant mind-set existed in the West based on the belief that economic development through globalization would lead to a convergence towards liberal, political and economic values. Instead, other geopolitical trends are becoming the reality, at the same time as global cross-border challenges (such as health, or the climate crises) are becoming more obvious and pressing.

Africa’s growth potential

The African continent’s population is projected to reach 1.1 billion people by 2040 and will become the largest workforce globally. With its ‘Agenda 2063’, the African Union has established an ambitious strategy for a prosperous Africa based on inclusive and sustainable development.

China's economic power on uncertain speed

China has grown from an emerging consumer market into a powerful and influential economy in recent years. With strategic long-term targets designed to modernize its economy and society, it has transformed its economy into one of high-tech industry and it has become a nation with global influence. However, the long-term development perspective is uncertain.

Increasing fragmentation of globalisation

Following the financial crisis of 2008-2009, the phase of hyperglobalisation has peaked. Strategic autonomy, populist nationalism and systemic failures of globally highly interdependent supply chains, have led to a slowdown in the speed of globalisation. Globalisation will continue to be more fragmented, based on strengthened trade within regional trade blocks and with like-minded partners. This will lead to a ‘multipolar’ world. Global trade will remain an important pillar.

Previously Covered Trends

These are trends that were spotted in the past, and might have grown or faded away in time.

-    Economic power shifts
-    Foreign direct investments
-    Benefit from globalisation
-    Global trade
-    China's R&D strategy

 

Future Snapshots

A future snapshot shows a plausible image of what might happen in the future in relation to this Megatrend. It is a creation built using knowledge and imagination. These snapshots presented here are excerpts of inspiring future-oriented reports written by other colleagues and organisations.

2030, an integrated and prosperous Africa

“January 2030. Africa is a more integrated, peaceful and prosperous continent with remarkable positive repercussions for human development. While vulnerability to climate change, poverty traps, fragility hotspots, conflicts and ungoverned spaces persist in some areas, most of the continent is experiencing economic growth, innovation, and social progress. Urban centres are in the frontline of such development. Cities like Johannesburg, Addis Ababa, Casablanca and Abidjan have become leading global economic hubs; similarly, Mombasa, Djibouti, Lagos and Durban are leading centres for connectivity and transportation. The project of regional integration has deepened and the AU now has a stronger voice in influencing global affairs.”

African Futures 2030, free trade, peace and prosperity. Faleg, G. Chaillot Paper /164. European Union Institute for Security Studies (2021)

Yin & Yang

"China and the United States both field successful vaccines. China remains assertive, but the United States and its allies contain its revisionism and aggression. Tech decoupling but world trade remains largely intact. The United States and China cooperate on select issues."

Other sketched scenarios are: Hammer & Sickle, Skull & Bones, Stars & Stripes

What will great power competition look like? Four scenarios for a geopolitical order in 2025 - 2050. Center for Strategic & International Studies (2020)

Complex prosperity

“Society has inched forward to create a more sustainable planet, but how sustainable it is, is not clear. We live in a world of relative economic prosperity and multilateralism. There are efforts towards the joint governance of the commons. In this multilateral world, a focus on strategic autonomy has equipped the EU with the ability to participate in setting the global agenda. (…) The US and China are economic leaders in global trade that offers growth and prosperity for the most part. The EU remains a part of this globally trading world, but continues to lag behind in the latest research and innovation trends. Citizens are supportive of the EU’s ecological ambitions, but they now reject traditional governance systems. (…)”

Other sketched scenarios are: Green leadership, Economic growth above all, and Retreat inwards.

JRC 2021 Shaping and securing the EU's Open Strategic Autonomy by 2040 and beyond

Globalisation 5.0 - Reconnection

“Increased socio-economic and technological integration has led to strengthened regional and global alliances, the recovery and diversification of supply chains, high labour and data mobility, as well as the proliferation of innovation in goods and services. Following the disruptions caused by the global pandemic and major conflict in the early part of the decade, recognition of the shared prosperity derived from a rules-based order has grown. Yet there is a marked trend away from the globalization of the past ,as local economic and social resilience become critical considerations. (…) Supply chains are also both more resilient and more politicized, as countries and multinational companies have become wary of returning to highly globalized ultra-efficient supply and distribution. Most aim to strike a balance between diversified local, regional and global supply chains. (…) Greater physical and virtual economic integration across economies serves to remind global powers of the gains to be reaped from continued cooperation.”

Other sketched scenarios are: Analogue Networks: Virtual Nationalism; Digital Dominance: Agile Platforms; and Autarkic World: Systemic Fragmentation

World Economic Forum (2022) Four scenarios on the state of the global economy in 2027


Further Reading

Want to explore more? Some interesting reading is below:

 

This Megatrends Hub is a repository of foresight related information. It highlights long-term driving forces and its underlying shorter-term trends. This repository can help you understand the changing society in a broad and more systemic way. 

Disclaimer: this repository is by no means comprehensive and apart from established scientific knowledge contains also issues which are subject to scientific debate and where research is ongoing or only starting (indicated as stronger or weaker trends) to give the reader some insights and ways to further explore the topics in more depth.