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8/7/2019 world's economy in 2030
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Where nextfor the global economy?
a view of the world in 2030
aCCoUntanCY fUtUreS
http://www.accaglobal.com/afhttp://twitter.com/home/?status=RT:%20+Where+next+for+the+global+economy?+A+view+of+the+world+in+2030+http://bit.ly/aQT87X+%23ACCAhttp://www.accaglobal.com/http://www.accaglobal.com/af8/7/2019 world's economy in 2030
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ABOUT AccA
ACCA (the Association of Chateed Cetified Accountants) is the global bod fo pofessional accountants. We aim to offebusiness-elevant, fist-choice qualifications to people of application, abilit and ambition aound the wold who seek a ewadingcaee in accountanc, finance and management.
Founded in 1904, ACCA has consistentl held unique coe values: oppotunit, divesit, innovation, integit and accountabilit.We believe that accountants bing value to economies at all stages of thei development. We seek to develop capacit in the
pofession and encouage the adoption of global standads. Ou values ae aligned to the needs of emploes in all sectos andwe ensue that, though ou qualification, we pepae accountants fo business. We seek to open up the pofession to people ofall backgounds and emove atificial baies, innovating ou qualifications and thei delive to meet the divese needs of tainee
pofessionals and thei emploes.
We suppot ou 140,000 membes and 404,000 students in 170 counties, helping them to develop successful caees inaccounting and business, based on the skills equied b emploes. We wok though a netwok of 83 offices and centes andmoe than 8,000 Appoved Emploes woldwide, who povide high standads of emploee leaning and development. Thoughou public inteest emit, we pomote appopiate egulation of accounting and conduct elevant eseach to ensue accountanc
continues to gow in eputation and influence.
The present system o global cooperation is
not working sufciently. [We need to] look at
all issues on the global agenda in a systemic,
integrated and strategic way. We have to
rethink our values; we are living together in
a global society with many dierent cultures.
We have to redesign our processes; how dowe deal with the issues and challenges on the
global agenda?
KlAUs schwAB, PresidenT And FOUnder OF
The wOrld ecOnOmic FOrUm, JAnUAry 2010
http://www.accaglobal.com/http://www.accaglobal.com/8/7/2019 world's economy in 2030
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where nexT FOr The glOBAl ecOnOmy? 3
The global panel o experts
T v p t out a t poa v of t patpat a o ot
pt t v of t po o ttuto t po oup o o.
VerenA chArVeT
Managing lawe, Invesco;
fome legal counsel at
Baclas Wealth; fome
pincipal at Baclas
Global Investos
JOhn deFTeriOs
Coespondent, CNN Business
News and pesente/edito of
Marketplace Middle East
Andrew dilnOT
Pincipal of St Hughs College,
Ofod Univesit; economist;
boadcaste; fome diecto
of the Institute fo Fiscal
Studies
AnTOniO esTrAny y
gendre
Chaiman, Aial Analtics
(financial analsis
outsoucing compan); fome
membe of HSBCs eecutive
committees (Agentina and
Ameicas egion)
PrOFessOr sAUl esTrin
Pofesso of management
and head of the depatment
of management, London
School of Economics and
Political Science
chin KwAi FATT
Managing diecto,
PicewatehouseCoopes,
Malasia
mArK gOyder
Founde diecto,
Tomoows Compan
TOny hegArTy
Chief financial management
office, Wold Bank
lOUghlin hicKey
Global head of ta, KPMG
miKe hOBdAy
Patne, IBM, and fome CEO
of Atos Consulting
JAPheTh KATTO
CEO, Ugandan Capital
Makets Authoit
nenAd PAceK
Pesident,
Global Success Advisos
PrOFessOr mAUry
PeiPerl
Pofesso of leadeship
and stategic change, and
chaiman, business adviso
council, IMD BusinessSchool, Switzeland
ABBAs shOJAei
Founding patne,
Salehandishan & Co
(audit fim), Ian
mAlcOlm wArd
Leadeship team,
Gant Thonton UK
THE GLOBAL PANEL OF ExPErTSwhere nexT FOr The glOBAl ecOnOmy? 3
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Foreword
This epot pesents a vision of the wold in 2030.
The global economic cisis that stated in 2007 continuesto demand shot and medium-tem solutions fom
politicians, business leades and othe opinion fomes.
Howeve, in ceating new egulato bodies, commecial
stuctues and globall coodinated appoaches, leades
must conside the futue impact of shot-tem measues.
While debate continues on the outlook fo global
capitalism, we eploe the implications of ou changing
wold and offe a view of the global econom in 2030.
In ode to do this, ACCA discussed seveal hpotheses with a global panel of
epets, asking them how the believe the wold might evolve ove the net 20eas. The panel includes independent business leades, economists, academicsand commentatos fom aound the wold. Thei insights on the futue of the
global econom povide new paametes within which we eploe the business andgovenment dnamics that will shape the net two decades.
At ACCA, we wok closel with emploes fom multinationals to SMEs, govenmentsand egulatos to develop the global accountanc pofession. In doing this, weundestand that accountanc can advance onl with a deepe undestanding of
the diection in which global economic foces will take us. This eseach stud wasconceived to povide this citical contet essential to the long-tem development of thepofession and demonstate the value of accountants fo business.
Where next for the global economy? is designed to help ou navigate todaschallenges though an undestanding of how ou actions will shape the woldof tomoow. We shae ou panels ideas and pespectives to help eades make
decisions based on the collective undestanding of those at the foefont of debate. FoACCA, these pespectives fame the issues that we will investigate moe deepl in ouongoing eseach.
We would like to thank ou panel of global epets, who geneousl povided theitime, epeience and insight fo this epot. We would also like to emphasise that the
views the epess ae thei own pesonal opinions and do not necessail epesentthe polic of the oganisations in which the wok.
Helen BandChief eecutive, ACCA
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where nexT FOr The glOBAl ecOnOmy? 5
Contents
The glOBAl ecOnOmy 6
Multi-egional globalisationACCAs pespective
The disTriBUTiOn OF glOBAl POwer 9The wold becomes flatteWho will dominate the global powe-base in 2030?
resOUrces: scArciTy And cOmPeTiTiOn 12Bugeoning demand
Uncetain supplThe ecological cedit cunch a ta on economic gowthThe leapfog phenomenon
The FUTUre OF FinAnciAl mArKeTs 15What will global makets look like?Hamonisation of egulation
Impoved access to finance
The cOrPOrATe ecOsysTem 17
A wold of shopkeepes the entepeneus osteFluid, fleible fedeations of businessesA changing fom of collaboation
gOVernAnce And gOVernmenT 20Govenance and assuance
Towads a sstem of geate self-govenance and esponsibilitShifting sands between the public and pivate sectos the ole of the state in 2030
mUlTi-regiOnAl glOBAlisATiOn in 2030 24Five foundations fo egional gowth and success in 2030
A vision of egional chaacteistics in 2030
CONTENTS
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Tt a bot a o a a ot t o pot a to. i 1990, no
maa a a fo ja, maat Tat fo ovt, T B-l
pub a popoa fo t o b a mooft au wo 3. T
5.3 bo pop t o 1990, t a o 6.8 bo. B 2050, t ou bo ta 9 bo1.
The global econom is now at a tippingpoint; pevious intepetations of success,gowth and global statue have been
based on movement in the Fotune,FTSE, CAC, DAx and Hang Seng indices,tacking multinationals based in a few
dominant counties. This intepetation isnow adicall changing to ecognise the
egional stengths of divese and complemakets, famil business and a globalmittelstand of small and medium-sizedentepises. These stengths will define
the global econom of the futue.
Futuolog is an uncetain, even
impossible at, demonstated b theglobal financial shocks of the past theeeas. Although we cannot pedict the
futue, we can be bette pepaed fo it.B pesenting possible scenaios fo theglobal econom, we gain some clait
aound the stategies we need in ode tostee and pepae fo the couse ahead.
What might this couse look like?Boadl speaking, we see a futuewhee globalisation will continue and
will lead to a wold that is flatte. Ouundestanding of evolving globalisationwill be shaped b the stengths that wepeceive among diffeent egions. At the
copoate level, we epect to see theemegence of a wold of shopkeepesand new fedeations of businesses,
with geate collaboation between
people, businesses and makets. Thiscollaboation will be suppoted b
inceasing egulato hamonisation andconvegence. So the futue fo globalbusiness looks moe comple, moe
fluid and less clea cut. Despite this,ou panellists viewed the joune weface with a huge degee of optimism,
based on the individual and collectiveadaptabilit of the human ace.
1 United Nations Depatment of Economic Affais (Population Division)
Ou epet panel was given hpotheseswhich eploe the etent of potentialchange as spingboads fo discussion.
Panel membes shaed thei pesonalviews, which we have intepeted andshaped into five specific aeas.
1 dtbuto of oba po
A much bigge goup of counties nowdominates global debate. Oiginallsteeed b the G5 Fance, Geman,Japan, the UK and the US the
global econom was inceasinglinfluenced b Belgium, Canada,Ital, the Nethelands, Sweden and
Switzeland, leading to the G11.recognising the impact of developingeconomies has led wold leades
to accept the G20 nations as thenew global base and embace aneve wide goup in global economic
debate, as economic powe andinfluence speads.
2 rou: at a opttoThe competition fo natual esouceswill become moe intense. This
will esult in the need fo a moecoodinated, intenational appoachto accessing and secuing sufficientesouces such as oil the most
impotant commodit in the pastcentu but also food, basic andpecious mineals, and wate.
3 T futu of faa aktGlobal makets ae epected to
gow but in makedl diffeent wasdepending on egions, esouces andpatneships. Financial egulation
will convege acoss makets asintenational egulato coopeationcontinues. This will facilitate
an incease in the souces anddestination of funds and the volumeand value of global capital flows.
The global economy
4 T opoat otSpecialisation continues asbusinesses look fo cost and scaleadvantages b placing elements of
thei value chains in the optimallocations. An inceasingl vitualnetwok of entepeneuial businesses
will seed, connect and collaboate on
a global scale. We call this a woldof shopkeepes. This will fom a
sstem of specialist SMEs that willesemble moe composite, successfuland cultuall adaptable fedeations
of businesses: the multinationals ofthe futue.
5 gova a ovt The futue ole of govenments is
defined b an emphasis on eithe
the facilitation of pivate entepiseo policing the sstem. Is thee acoheent middle wa suitable fo allnations, egional goups and the wold
econom? rigoous govenance andassuance is citical as the globalisationof business continues: new sstems
will emege to keep the wold ofshopkeepes on the ada, andmoe pinciples-based egulation
will incease self-govenance andesponsibilit within fedeationsof businesses.
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where nexT FOr The glOBAl ecOnOmy? 7
1 dtbuto of oba po
2 rou: at a optto
3 Futu of faa akt
4 copoat ot
5 gova a ovt
scAle OF POTenTiAl TrAnsFOrmATiOn
F 1: F TT TFT T F C
TThe global economy
THE GLOBAL ECONOMy
mUlTi-regiOnAl glOBAlisATiOn
Each aea above shaes a commontheme: the Westen view no longedominates the evolution of global
makets. Global capitalism is changingand we need to view the futue though adiffeent lens. But how do we do this?
Ou hpotheses enable us to eploenew visions and test ideas someeceived, some new and to ente into
wide debate with a ange of epetsfom aound the wold to eploe futue
diections and conside thei likelihoodand impact.
At the tipping point of globalisation we
look at five foundations fo gowth thatwill facilitate egional success in 2030.
We pesent a selection of ou panelliststhoughts about diffeent egions. It is
clea that egions possess ke definingchaacteistics that the can haness toshape and secue thei futue couse on
the global stage.
statu quo Tafoato
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The global economyT
AccAs PersPecTiVe
As the global bod fo pofessionalaccountants, ACCA is seeingsignificant shifts in economic powe
aound the wold.
Twent-two eas ago, ACCA became
the fist intenational pofessionalaccountanc bod to ente mainlandChina. Hee, ACCA witnessed an
immense appetite fo pofessional skillsin ode to suppot and fuel enomouseconomic epansion. Since then, theise of the BrIC nations and, moe
ecentl, the N-11 counties has healdeda new wold ode, with establishedWesten companies competing and
collaboating with an eve-wide
and moe divese ange of economicentities. Alongside this, the demand fo
pofessional accountants tained to ahigh intenational standad to suppotbugeoning economies aound the wold
has continued to gow apace.
Though ove a centu of wok in
ceating finance pofessionals, ACCAknows that talent and ambition esideevewhee and anwhee. And that,
given the ight conditions, business canflouish in an cone of the wold.
ACCAs long-tem mission has been tosuppot the development of all tpesof economies though the suppl of
high-calibe pofessional accountants.As a esult, it has established opeationsin 26 emeging makets aound the
wold, contibuting diectl to buildingfinancial skills capacit. Though thiswok, ACCA is alead witnessing the
immense contibution emeging maketsae making to the global econom andseeing the potential fo an even geate
ole fo these makets in the futue.
Fo this eason, ACCA foesees a futue
wold econom with moe pait anda much wide ange of ke plaes,shaing powe and influence aoundthe wold and binging with it geate
global pospeit. To undepin this, ACCAbelieves it is inceasingl necessato have a single set of high-qualit
accounting and auditing standads,facilitating the maimum mobilit oftalent and investment.
As the panel assets, it is inevitablethat we will see intense pessue on
natual esouces in the net 20 eas.
This epot contains some staggeing
figues on population gowth and futueconsumption, fuelled b the ambitionsand aspiations of a new global middle
class. The twin spectes of dwindlingnatual esouces and the impact ofclimate change loom lage. The etent
to which these affect societ willdepend on the decisions oganisationsand individuals make now. The dange
is, that b failing to invest in theceation of sustainable business, thewold isks haming the envionment
iepaabl endeing pats of theplanet uninhabitable, ceating swathesof economic migants and placing the
global econom in pepetual peil.
ACCA believes that the ceation of agenuine global geen-colla economwill theefoe not onl be vital but alsobings with it eciting possibilities fo
smate technologies and businesses.Accountants will have a ke ole to plain binging about a low-cabon woldthough leading on the disclosue of
companies cabon emissions and theauditing of these disclosues to quantifand pomote the financial consequences
of climate change.
As a dive fo this, ACCA believes itwill be impeative to have a common,intenationall accepted cabonaccounting standad.
If we accept the pemise that thee willbe a geate numbe of plaes in the
intenational econom, thee will be aneed fo global appoaches to egulationacoss the boad. But ACCA suppots
the panels view that this will be bestachieved though close collaboationbetween nations, athe than though the
ceation of monolithic supe-egulatos,
opeating at a distance fom the maketsthe seve. ACCA believes that egulatos
need to be local and close to those beingegulated and theefoe pioit needs tobe given to the ceation of mechanisms
which will allow fo the shaing ofknowledge and best pactice betweennational egulatos.
With the plethoa of business modelsand stuctues we ae likel to see
emeging in the net 20 eas, ACCAstongl suppots the panels view of
the need fo small, light-touch andstaightfowad egulation, especiall fosmall businesses. ACCA believes these
entepises will inceasingl speahead
innovation and ceativit and the needeve encouagement to thive. Thislinks ve cleal with the ke enables
fo gowth the panel identified, withentepeneuial spiit being seen as amajo contibuto to the futue success
of national and egional economies.ACCA has taken a lead in lobbing fothe inteests of SMEs with govenments,
egulatos and standad settes acossthe wold, helping to position itself as theaccountanc bod most closel affiliated
to the small business secto. To maintainthe health of the secto and enable newbusinesses to pospe in the futue,
e-establishing good access to finance fosmall businesses will be citical. Fo the
lage, moe comple global oganisation,it is inevitable that egulation will need tobe both moe hands-on and collaboativeacoss bodes.
ACCA is alead championing anumbe of themes highlighted b
this epot, though its AccountancyFutures pogamme of theme-ledeseach and insights, helping pepae
the accountanc pofession fo theimmediate and longe-tem challengesthe futue global econom will bing.
.aaoba.o/af
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where nexT FOr The glOBAl ecOnOmy? 9
The distribution o global power
THE DISTrIBUTION OF GLOBAL POWEr
ts terribly easy to describethe world economy as thoughits a war or a race. it is arace, its a peculiar type o racewhere whoever wins crossesthe line, turns around andexplains to everyone else howto win.
Andrew dilnOT, PrinciPAl OF sT
hUghs cOllege, OxFOrd UniVersiTy,
ecOnOmisT, BrOAdcAsTer And
FOrmer direcTOr OF The insTiTUTeFOr FiscAl sTUdies
hpot i 2030 t o b fatt, t a pa ba of faa po. goba
po ft to akt.
The wOrld BecOmes FlATTer
The wold stage is fundamentallchanging as a esult of globalisation
and the gowth of emeging makets. In2030, ou panel epects these tends tohave led to a flattening of the economic
landscape; man of them pedict thatin 20-eas time thee will be a moegenuinel global maketplace, whee
egional baies to the flow of goods,sevices, capital and knowledge will havebeen loweed o even dismantled.
Fewe constaints to globalisation willlead to moe competition. yet this isnot seen in tems of a battle, o a ace.
The panel was united b a feeling ofoptimism; the see the counties ofthe wold as pedominantl shaing in
its wealth, helping each othe along.Thus, it will be less a game of winnesand loses and moe a case of having
all the plaes on the same team, withadvanced and emeging economies
leaning fom each othe; ideas,
capital and was of doing business willinceasingl flow between the two.
Chin Kwai Fatt, diecto ofPicewatehouseCoopes, Malasia,sas thee will be a ebalancing of the
wold econom as it adjusts to thefinancial cisis b becoming less heavildependent on the US: If the esultinglandscape is such that these emeging
economies will have a geate ole,
thee will be a highe degee of mutualdependence to the etent that we will
not just be eling on the US domesticmaket. Hopefull emeging economieswill ceate new maket clustes, which
in tun will pomote two-wa economicpotential between the US and othetading nations. It will theefoe become
a two-wa flow, athe than a paallelunivese whee goods ae shipped to theUS while capital is shifted to the East.
F 2: W WT CT C2 WT
C C3
8
10
6
4
2
0
-2
1970 1980 1990 2000 2010
Tend
197020082
wo a gdP ot
1970 1980 1990 2000 2010
ra gdP ot
8
6
4
2
0
-2
-4
Emeging and
developing economies
10
Advanced
economies
2 IMF World Economic Outlook 2009
3 IMF World Economic Outlook 2009
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The distribution o global powerT
n 2030 the largest economyin the world will be the , thesecond largest will probablybe China, ollowed by Japanand ermany. There could
be a shit but it wont be atransormation.
sAUl esTrin, PrOFessOr OF
mAnAgemenT And heAd OF
dePArTmenT OF mAnAgemenT AT
lOndOn schOOl OF ecOnOmics And
POliTicAl science.
The diving foce of globalisation is
theefoe no longe epected to be themultinational companies of advancedeconomies. Instead, wold gowth will
be poweed b intenational companiesbased in emeging makets.
The signs of gowing matuit aeinceasingl appaent. The numbe ofmultinational companies fom emeging
makets in the Fotune Global 500 hasmoe than tipled ove the past decade;thee wee 70 in 20084, and emeging
makets shae of wold tade is gowing,along with thei impotance in globalequit makets. Thei 6.5% aveage
GDP gowth fom 2000 to 20075 hasspaked a lage ise in the numbe of
emeging maket equit funds that aepomising attactive etuns. Afte theecove fom the Asian financial cisisin the late 1990s, pivate capital flows
to low- and middle-income economiesmoe than quadupled fom $200bn in2000 to moe than $900bn in 20076.
The financial cisis that stated in 2007has highlighted this pocess, thowinginto shap elief the weaknesses of the
financial stuctue in some advancedeconomies and the elative stengths ofcetain emeging makets, paticulal in
tems of debt-capital atios.
We theefoe see a new global
powe-base foming. The inceasedpominence of the G20 will haveecalibated the statue of emeging
makets in 20-eas time. The wold in2030 is epected to be chaacteised bmultiple centes of economic powe and
numeous financial poles.
whO will dOminATe The glOBAl
POwer-BAse in 2030?
In a flatte wold the etent to which
global powe will shift can be seenin diffeent was and we offe theepossible scenaios fo the edistibutionof global powe.
1 A t of avt
akt, pa t eat
The fist scenaio envisaged b somepanellists is a wold whee political and
economic powe will be inveted and thenew cente of gavit will lie in the East,paticulal in emeging makets, with aelative decline of the West.
The high-gowth scenaio of the WoldBank pedicts GDP gowth in emegingmakets will continue to outpefom
that of the developed economies.Nenad Pacek, pesident, Global SuccessAdvisos, notes that the economic
fundamentals in emeging Asia, theMiddle East and ke makets in LatinAmeica and Cental and Easten Euope
ae notabl stonge than those of theWesten Euopean makets, the US oJapan. He points to the fomes ecod
accumulated foeign echange esevesand lowe national debt.
In this scenaio, the doos would open ona new EastEast ais of powe. Capitalflows between emeging makets would
continue to incease as these countiesmove awa fom dependence on thecuent developed wold and access to
finance impoves. This ais of powe
would see a einvigoation of tadingoutes stetching fom emeging Asia to
the Mediteanean via Noth Afica.
John Defteios, coespondent, CNN
Business News and pesente/editoof Marketplace, Middle East, sas:The building of the new silk oute and
the new spice oute is a ke theme fothe futue. It uns fom Noth Aficato the Middle East, to Cental Asia, to
China and then moves down into SouthEast Asia. Five eas ago thee was aeluctance to foste tade between, fo
eample, China and the Middle East,but that has changed damaticall. Thatis because the etun on capital fo aMiddle Easten soveeign wealth fund
in sa Indonesia, Malasia o China, ismuch geate than it would have been inGeman, Fance, the UK o the US.
4 The rise of the emerging market multinational, Accentue 2008
5 World Economic Outlook 2009, Wold Bank
6 Wold Bank
The business world will beastonished by the rise o newcompanies rom emerging
markets at how powerul theywill become. They should notbe underestimated in any way.
nenAd PAceK, PresidenT, glOBAl
sUccess AdVisOrs
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TThe distribution o global power
7 World Population Prospects 2008, UN Population Division
The most impotant counties in an
Easten ais of powe would be thetwo Asian nations of China and India.As Andew Dilnot, pincipal of St
Hughs College, Ofod Univesit, sas:In 25-eas time, eal GDP in thedeveloped wold will have doubled. If
China and India gow at 8% a ea, in2035 the will be five times as lage asthe ae now. The elative size of those
two massive developing economies willbe the most significant change in a20-ea timescale. Japheth Katto, CEO,Ugandan Capital Makets Authoit,
elates that in Afica the inceasinginfluence of India and China in paticulacan be felt: I can see a ve stong shift,
paticulal in Afica, in whee foeign
diect investment, assistance, tade andso on is coming fom. Fo instance we
have seen Indian companies getting intotelecommunications and China gettinginto banking.
The IMF estimates that b 2030 emegingmaket economies will be home to ove
80% of the wolds population7 and thatthei shee size will ceate the wolds
lagest middle classes with spendingpowe. Thei ise will be accompaniedand suppoted b nascent economies
that will build on thei own competitiveadvantages, and that will include andleveage this gowing middle class. As
Pacek sas, the G20 will epandto accommodate such ising powes:Thee ae man good, eciting emeging
makets out thee sizeable ones andthe will gow even futhe in the netfive to 10 eas. The will want a sa.
These poweful counties willpedominantl lie in emeging Asia, with
some in Cental and Easten Euope.Gowth in othe emeging makets will be
led b commodit epots; thei businesseswill continue to flouish because the aenot et esticted b tight egulation andlaws. It will be the emeging makets
that will poduce most of what ou panelcall the new globalists the leades oftomoow who will inceasingl
demand a stake in global foums, ceatinga shift in global political leadeship.
In this scenaio, matue economieswould ecod elativel slowe gowth andbe dependent upon emeging makets
fo capital, consumes and labou. InDefteios wods: The G8 will not beable to live within its own envionment
an moe. Thee will be a gavitational
pull to the East. This elative shift inpowe would have a majo impact on the
constuct of business as we see it toda.Fo instance, as emeging tading blocsstengthen thei economic and political
unit, the wold will not necessailcontinue to be diven b the US dolla.In addition, dominant multinationals
headquateed in advanced economieswould pla a diminished ole in globalbusiness losing the edge to intenational
companies fom emeging makets.
2 A ft but o tafoato t
of t wt
In a scenaio whee economic poweshifts but stengthens in the West, todas
advanced economies would continue toshow thei powess fo innovation. Theipolitical and economic stabilit would
estoe gowth and keep them at the topof the value chain. The would continueto be the incubatos of ideas, with
emeging makets continuing to emulatethe model of Westen consumeism.
As this model dominates the wold,
smalle Westen economies wouldincease thei paticipation in the globaleconom, etending the G gouping.
These smalle economies would embaceentepeneuialism with a politicalmomentum that helps them step out
of the shadow of the moe dominantWesten economies. But will innovationeall be about lage o smalle, Westen
o non-Westen counties?
Antonio Estan Gende, chaiman,
Aial Analtics, fome membe ofHSBCs eecutive committees (Agentina
and Ameicas egion), sees countbodes as athe insignificant, aguingthat the net Micosoft could just aseasil come fom China o New Zealand
as the US. But he notes: Its moe likelthat innovative developments will happenin makets that ae stable and have an
entepeneuial tadition and mindset.
With economic powe concentated in
the West, the developing economies oftoda would continue to show stongGDP gowth, biting at the heels of the
THE DISTrIBUTION OF GLOBAL POWEr
West in 2030. China and India will
come closest to closing the gap, and thewould continue to have moe weight inglobal discussions, plaing a pat not fa
fom thei cuent ole.
3 goba ua a a a of
ato fft poto o t
vau-a a
In this scenaio panel membes see no
defined global ode in the value-addedchain. Veena Chavet, managinglawe, Invesco, fomel a legal counselat Baclas Wealth and peviousl a
pincipal at Baclas Global Investos,sas: I dont think that [the futuedistibution of global powe] is clea cut.
As people want to move up the chain,
whee does, fo eample, China go? IfChina moves to Koeas position, whee
does Koea go? Fom within each countou ae constantl looking fo the leastepensive place to get things done, so it
is fluid. Fo eample, call centes weeinitiall based in Scotland, then thewent to Hdeabad. Hdeabad became
too epensive, so the went to Pune.Thee is alwas someone looking fo acheape envionment.
Saul Estin, pofesso of management at
the LSE, points to a tpical developmentccle, with counties joining each otheon pa athe than displacing eachothe. The point is, as all these counties
develop the all do the same things.Fance and Geman basicall makeeactl the same poducts and tade
with each othe. In 100 eas fom now,China will make the same poducts asthe US and tade those poducts with
the US. Thees a value-added chain andeveone just moves up it.
So the thid scenaio would pla out like
a dance of diffeent egions: the poweof nations would shift continuousl
depending on whee the ae on thevalue-added chain of poduction atan one time. The will define theiown competitive stengths and no
single egion will be moe impotantthan anothe. This would be a woldof tue inteconnectivit and mutual
dependence, with moe balancedeconomic powe.
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esources: scarcity and competition
hpot sta o atua ou a. T at oqu
b a a upp. T at p, oft a o
oo to.
In 2030 sustainabilit issues will
continue to be impotant and thecopoate and social esponsibilit(CSr) agenda will become much moe
cental to business. Panellists aguethat sustainabilit will no longe sit inbusiness and govenment silos; instead,
it will unite eve stakeholde in theglobal econom.
BUrgeOning demAnd
The bulk of the population gowthpedicted b the UN Depatment ofEconomic Affais (leading to a possible
woldwide population of nine billionb 2050) will be dominated b thedeveloping wold. Population in the
cuent developing wold is pojectedto ise fom 5.6 billion in 2009 to7.9 billion in 20508. This will beconcentated in todas emegingmakets in Asia, the Middle East and
some pats of Afica. yet the shee sizeof this demogaphic will be eclipsed
b the incease of thei elative wealth.Income gowth in counties such as Indiaand China is leading what has beendescibed as the thid wave of middle
class emegence9.
Malcolm Wad, leadeship team, Gant
Thonton UK, descibes his epeiencesin leading the fims dive into India,and how in his view, the count
demonstates how demand fo goods andsevices will acceleate. On the one handou see people living on 50 upees a da,
salvaging and eccling evething. But
on the othe ou will see unbelievablewealth and enomous consumption. In
the middle of 45-degee heat ou willhave enomous ai conditioned officesand people consuming fesh fish which
has been flown in fom a good fewhunded miles awa fo sushi. We alltalk about India, China, South Ameica...
but thee is the whole continent of Aficawhich hasnt eall become economicall
Truth so oten ollows fction.n Quantum of Solace, orthe frst time James ondsnemesis is not seeking worlddomination through gold ornuclear weapons, but throughcontrol o that most essentialresource or lie water.
miKe hOBdAy, PArTner, iBm And
FOrmer ceO OF ATOs cOnsUlTing
active et. And the histoic model is
that economic activit equals hugeconsumption, so I think if ou look at iton a big scale we will have some difficult
home tuths to face.
The nascent middle class is ceating a
boom in discetiona consumption anddemand fo esouces. Indias consumemaket, fo eample, is epected to
quaduple ove the net two decades10.
And thee is no doubt this bugeoningmiddle class will be a huge foce in the
wold econom. Analsts at Macquaieuse the tem Geneation A A foaspiation to descibe this goup,
saing: The massive size of Geneation Ain the net 15 eas ensues it will be themost influential and poweful geneation
in the wolds histo.
The Economist featued a special epot
on this goup in 2009 called BurgeoningBourgeoisie. Abbas Shojaei, founding
patne, Salehandishan & Co, Ian, sas:The most likel new consume maketwill be in aeas such as the Middle East,which has a concentation of wealth
fom oil, gas and othe ich mineals.The aspiation geneation will also bein counties like Ian whee thee aelots of oung, talented people who have
not had the chance to pove themselvesso fa, but if the envionment becomesmoe favouable, the eneg and
ambition will attact foeign investmentin such counties.
With an eplosion in demand onthe hoizon, pices of had and softcommodities, eneg and tanspot
could soa. As Geneation A movesawa fom subsistence faming, its dietand consumption pattens will adicall
change. The povision of food has beennamed as one of the fou emeging globalisks of the 21st centu b the Wold
Economic Foum11.
8 World Population Prospects 20089 Sujit Bhallas fothcoming wok (The Middle Class Kingdoms of India and China). The fist wave was in 19th centu Westen Euope, the second was in the bab
boome (195080) geneation in developed counties.
10 McKinse Global Institute
11 Global Risks report 2008, Wold Economic Foum
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To get a sense of how globalconsumption pattens will change, we
must look to emeging makets. China,fo eample, is the biggest maket fomobile phones, with moe than 395
million subscibes. In 2007 it ovetookJapan as the wolds second-lagestca maket. The wolds second-lagest
soft dinks maket is Meico. Out of thewolds si lagest eneg consumes,thee ae middle-income economies:
russia, China and India12.
As consume makets gow andcompanies stive to take advantage of the
oppotunities the pesent, thee will bea significant impact on the demand fo,and management of, esouces. Changingdiets, inceased demand fo food, isingdemand fo eneg that equies wate
and the inceasing use of biofuels havealead put pessue on wate esoucesin the US and Bazil. In fact, b 2030,
40% of global GDP and 85% of thewolds population will be in egionswhee wate demand eceeds suppl13.
In tems of eneg, global demand is
epected to soa 44% ove the net two
decades. Almost 75% of the ise in globaleneg demand up to 2030 will occu
in developing counties, paticulalChina, India, russia and Bazil14.
UncerTAin sUPPly
If ou have a global econom in whichthee is eponential gowth in the
population and the wolds esouces
rESOUrCES: SCArCITy AND COMPETITION
Tesources: scarcity and competition
emain constant, then ou have apoblem. So I think the long-tem futue
supplies of gas, electicit, new fomsof eneg, food and wate thingswe take fo ganted as being eadil
available toda ae going to be apoblem. We ae all going to have to bea lot smate about managing demand
and consumption, sas Mike Hobda,patne, IBM.
The ongoing depletion of woldesouces is well documented. Somepanellists aise questions as to whethe
these concens have been ovestated.
Pacek agues that it is difficult toaddess and assess the esouce issue
because the negative angles have beenoveplaed. He suggests that it is likelthee ae moe eseves than have been
documented and that changes in picesdo not eflect eithe the fundamentaleseves o undeling maket demand.
He sas: The one thing that is cetainabout commodit pices is ou will seecontinued speculation as we have seen
ove the past 10 eas. The oil picemoved fom $9.60 in 1998 to almost$150 within a decade. And at the same
time, eal oil consumption aound thewold wasnt even gowing moe than2% a ea. The pice movement ove the
past five eas has nothing to do with thefundamentals and the actual usage.
Official Oganisation of PetoleumEpoting Counties (OPEC) statisticsae moe beaish. OPEC will continue
12 The challenges to government from the multi-polar world, Accentue 2009
13 Wate scacit and futue business isks, Llods, Apil 2009
The United Nations World Water Development Report 3, UNESCO 2009UN wate statistics database
14 Eneg Infomation Administation/Intenational Eneg Outlook 2009
15 The new financial powerbrokers 2008 and The new financial powerbrokers: a crisis update 2009, McKinse Global Institute
16 Eneg Infomation Administation/Intenational Eneg Outlook 2009
to povide 40% of the wolds oil
supplies duing the net 20 eas.McKinse calls oil epotes one of thenew powe bokes and one that
is emaining esilient15
. The EnegInfomation Administation epotconcludes that although the demand
fo oil is inceasing, the wolds oilpoduction peaked in 200516. And mostof ou panellists agee with this view of
diminishing esouce suppl.
The ecOlOgicAl crediT crUnch
A TAx On ecOnOmic grOwTh
Howeve, moe petinent than theabsolute levels of esouces is the
stuggle fo access. This is a featue thatwill also be impotant fo those aeas
whee natual esouces ae plentiful.Katto sas: The winne is going to be theone who has access to those esouces.If the have access to them and this
access is cheap o economical, the aegoing to win because the battle of thefutue is going to be a battle of esouces.
It is a battle fo oil, a battle fo mineals,fo food, and so on. To me, the woldsfutue esouces ae in Afica.
Uncetaint ove esouces stetcheswell beond oil and eneg. Demand
will ise fo food, wate, steel, cement,basic metals and mineals and otheland esouces. This will necessitatea wide view one that eaches into
a egion whee paticipation in theglobal econom is patch and whosepotential is, some ague, unecognised.
In accessing esouces in Afica, thechallenges ae consideable, including alack of infastuctue, high cost of access
and distibution, political compleit andunknown levels of appopiate epetise.
The issue is fiecel political and the
panellists see an element of nationalismaffecting the development of this paticula
sto, eflected in inceasingl commonefeences to national issues such aseneg secuit and food secuit.
Man panel membes asset thateconomic gowth at the ate we have
witnessed ove the past few decades
A PrOFile OF generATiOn A
Age: 3040 eas
Eanings: $3,000$5,000 pe ea (appo) Chaacteistics: have moved to a lage cit Consume possessions: fidge, low-cost mobile phone
Consideing buing: fist ca o fist holida Wheeabouts: scatteed acoss the globe, concentated in the emeging
makets
Numbes: 2008 400 million; 2030 1 billion
Souce: Macquaie Investment Bank
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is ecologicall unsustainable. If theeis going to be a hot zone fo conflict, it
will be whee thee is stained access tonatual esouces, especiall oil, gas andwate, sas Defteios.
Some ague that the impact will befelt dispopotionatel b developing
counties. As Estin sas: you can
think of global waming like a massiveta an unstoppable, unsustainable
ta on economic gowth, whichwill fall dispopotionatel on thepooe counties.
In the shot-to-medium tem, commoditpices ae likel to continue to fluctuate,
ceating moe tension ove access to, andthe management of, these esouces.
17 Wold Bank Development Indicatos 2009
esources: scarcity and competitionT
The leAPFrOg PhenOmenOn
Some panellists point to a moe
optimistic esouce scenaio in whichcounties developing clean technologcould patne with emeging makets,
enabling them to leapfog the use ofesouce-wasting technologies andadopt clean, geene technologies to
fuel thei gowth. As Defteios sas,
shotages can be avoided b focusing onthe scientific and technological advances
necessa to espond to the gowth inwoldwide demand, diven pimailb emeging economies. This is whee
collaboation between East and Westshould pevail and whee G8 countiescan make a diffeence.
F 3: TC CT C17
400
300
200
100
0
Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Dec 07
Commodit pices (inde, 2000 = 100)
Metals and mineals
Eneg
Food
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The uture o fnancial markets
hpot T v oba pa f a optto ao out fo
a to fa. mo voat oba akt bo t o. T b o
uato a out o a oba v to ft t abt of opa, apta a pop to
fo ao bo.
THE FUTUrE OF FINANCIAL MArKETS
When discussing the futue of financial
makets, one question dominated thedebate. Will we see a faste economicccle in this millennium wheeb we
have to cope with ecessions ecuing ineve shote timefames?
yes we will go on having ecessions,but I dont think the will be an moe
fequent than the have been in the past40 eas. It will be astonishing if we evehave a gap between ecessions as longas the gap we have just had again. And
sometimes it will be a financial cisis,sometimes it will be a wa, sometimes itwill be a commodit-led cisis. We cant
know what the will be, but the willhappen, sas Dilnot.
whAT will glOBAl mArKeTs
lOOK liKe?
Past pefomance is no guide to the
futue at least that is the usual caveat
fo investos. But its difficult to makepojections without looking back at
majo tends.
The summe of 2007 and the ensuing
financial cisis maked a wateshed:not onl the beginning of the deepestshock and ecession that the wold
has seen since the Geat Depession,but also the end of an etaodinaillong peiod of economic gowth in theadvanced economies. As Dilnot sas:
If ou plot quatel gowth fo the UK,
back to 1955 what ou see is, fo thepast 16 eas, astonishingl consistent
economic gowth. Thee was a ecessionin the eal 1990s, befoe that, eighteas of economic gowth and then,
befoe that, fa moe fequent ecessions,an astonishingl volatile economicpefomance in the 1960s and 1970s.
We shouldnt be supised thee wasa ecession in 20089. We shouldbe staggeed that thee hadnt been a
ecession fo 16 eas. We have nevein the industialised peiod seen a gapquite like it.
Pacek points to GDP gowth in the pastfew eas as indicative of this tend: If
ou look at the annual gowth ates and
business sales gowth ates that we hadin 2006 and 2007, the annual inceaseswee incedible.
A numbe of the panel membes painteda scenaio fo the futue in which global
economic gowth will continue but likelslow, in lage pat, because the financialcisis has sown caution in the minds of
bankes, copoates and govenments.Pacek wans that gowth ates akin tothe past decade will be unlikel until
well afte 2030. He sas: All maketshave one thing in common. Thei gowthwill be slowe than in the high-gowth
eas and we ae now enteing an age ofeconomic modeation. This caution willpevent anothe boom o bust simila tothe one we have just seen fo some time,
pehaps even fo a geneation.
Othe panellists paint an altenative
scenaio: a wold in which nomal ates
of economic volatilit will etun aftethe cisis, and incease in fequenc as
counties get iche. The esult? Shapeand deepe highs and lows. As Dilnoteplains: Looking fowad, of couse
thee will be ecessions. The ae anatual economic phenomena and thepobabilit of a ecession gows the
longe the econom has been gowing.Because the longe the econom hasbeen gowing consistentl, the less
fightened people become and the moethe believe thei own hetoic about
how billiant thei poposition is. Andit is also the case that the longe theeconom has been gowing, the feweeall good popositions ae likel to be
left out thee. If an econom has beenstuggling fo 10 eas, then thee will besome eall good pojects available. But
once an econom has been gowing fo15 eas, then all the lowe hanging fuitwill have been picked. So we will go on
having ecessions.
Dilnot also emphasises the diffeential
effects on diffeent tpes of econom
and at diffeent stages. Its also the casethat I think when we have ecession it
is likel to be shap. And the eason fothat is to do with how ich we ae. Sa
the econom gows at 2.75% a ea,GDP doubles in eal tems eve 25eas, quaduples eve 50 eas. So
we ae massivel iche than we used tobe. As we get iche the composition ofou consumption changes. Much moe
of it becomes discetiona and centedon duables, and that means the speedwith which domestic consumption
can contact inceases, as the aveagewealth of an econom ises. And that iswh we see such a shap contaction this
time aound.
hArmOnisATiOn OF regUlATiOn
Whateve comes net, we know fonow that the financial cisis has thustfinancial egulation fiml into the global
spotlight. How, we asked ou panellists,do the epect the wold egulatoenvionment to be diffeent in 2030?
The panellists focused on two pioit
aeas: intenational egulato coopeationand, in paticula, convegence in globalfinancial egulation, In both aeas, theepect to see ongoing pogess. In theo,
panellists agee that global financialegulation is sensible and that it shouldbe a pioit. It is inceasingl impotant
to put in place global coopeation to solveglobal issues, because capital, people,companies and pollution ae global. Thus,
the means b which we esolve suchissues must also be global.
Thee is a big shift towads convegencebetween intenational standads and theUS accounting standads fo eample, soI think thats pobabl indicative of the
convegence that we see. And likewisepaticulal with the benefit of the ecentfinancial cisis oull find that the global
egulatos will pobabl have a geatesense of ugenc to coopeate and aimfo consistenc acoss the boad, sas
Chin Kwai Fatt.
Thee ae gains to be had fom being
pat of a goup whee evebod does
things in the same wa. Also in pats ofthe wold that ae not othewise lage
enough in themselves, businesses willcoopeate even though no juisdiction
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16
equies them to do so because the
altenative would be to lose competitiveadvantage. Ageement on hamonisedstandads is a positive development,
with national authoities epectedto ensue that the ae implementedlocall. This will pevent the dange of
egulato abitage.
Thee ae, howeve, seveal baies
and even danges. It is impotant thatgloball ageed standads and guidelinesdo not tanslate into a igid one-size-fits-all appoach whee local conditions
ae oveidden and egulation becomestoo emote fom those being supevised.Thee has to be an element of fleibilit,
with innovation not being cushed.
This of couse uns the isk that somecounties pescibe too much detail and
othes not enough but that is the pice ofnational authoities and laws continuingto be the basis of ou egulato sstem.
The altenative, which would be to tto establish a tue global supe-egulato,
would pesent etemel difficultchallenges:
a global sstem and famewok ofegulation implies that thee will
be one egulato. Cuent global
institutions do not have the will andthe authoit to undetake global
egulation. In paticula, thee isinceasing esistance to one aea ocount being the wolds policeman.
Thee is also ecognition thatbusinesses will need to be involved inthe ule-making and the famewok-
setting. Mak Gode, founde diectoof Tomoows Compan, sas: MiltonFiedman assumed we lived in a wold
whee companies wouldnt deal withthings that wee the esponsibilit of
societ because govenments would.But whee is the global equivalentof national govenment? Who isgoing to deal with all these issues?Effective solutions have bael begun
to emege. Thee is some debate ovewhethe bodies such as the WoldTade Oganisation (WTO) could step
in hee, but it will take time to shapepowes that ae effective, meaningfuland feasible to implement.
govenments ae not inclined to give
up thei soveeignt and contol.
Centalised global egulation iscomple, both legall given
juisdictional issues and logisticall.This has cost implications which
ae difficult to justif to national
electoates. The financial cisis couldmean moe closing of bodes anda tend towads moe selfishness
and potectionism a go-it-alonephilosoph not fo businesses butfo govenments. It is also moe
difficult to achieve globalcoopeation because thee is no longea Westen club.
While Intenational Financial repotingStandads (IFrS) ae inceasingl
accepted as the global standad fofinancial epoting, pogess towadsglobal convegence elsewhee is patch:
ta thee is some movement in
coopeation egading ta havens inthe Euopean Union, with evenueauthoities moving in a simila wa,but thee is also ta competition, an
eample being between Luembougand Ieland
tade a beakdown of the WTOcould lead to moe potectionism
finance egulation thee is some
pogess hee, but the teainis comple, with, fo eample,disageement ove hedge funds
pitching continental Euope against
the UK and the US
climate change this is a thon test-case fo global coopeation, with huge
diffeences in epectations betweenthe Euopean Union, the US, China,India and developing nations.
While global coopeation ove climatechange emains faught with difficult,
panellists see bette pospects fointenational egulato coopeation b2030, with the aim of making competition
fai. This entails no cental monitoing o
enfocing bod, but geate convegenceand moe consistent policies. regulatos
will have a geate sense of ugenc todo this given the ecent financial cisisand especiall if moe volatile makets
become the nom.This does not mean that all egulation
will be the same evewhee, but thategulation will use good base indicatos,and thee will be was in whichegulatos wok togethe to achieve faie
competition. Not onl that, but the need
to involve businesses is well ecognised,in ode to constuct appopiate
egulato famewoks.
Panellists note that thee is a long
histo of intenational coopeation andhamonisation in cetain aeas. Tanspotis the pime eample: fom the effective
implementation of shipping conventionsinto intenationall ecognised law(including immigation and impot and
epot customs and pactices) to theconventions that goven ai tanspot.These wok simpl because of the
phsical movement between two (omoe) identified counties.
Howeve, thee emains much moe to bedone in intangible aeas even when theesults should bing geneal benefits. Fo
eample, infomation echange betweenand within national egulatos and
acoss indust bodies emains limitedbecause of the lack of geneall acceptedstandads. The documentation of a cagoship is elativel simple and univesall
accepted, but the selection of infomationto be ead fo echange pesents a moefomidable challenge in moe comple
aeas such as ta.
Oveall, the path ahead fo egulation
is clea to the panellists. The epect tosee moe volunta as well as statutoegulation and pehaps even moe
self-egulation, as businesses aoundthe wold ecognise the need fo stictecontols in the aftemath of the financialcisis and pessue to demonstate to
stakeholdes that the ae pusuingsustainable and esponsible commecialpactices. The path will follow that set
fo accounting and epoting standads,which povide a famewok fo egulationand encouage global convegence.
The dange is that egulatos willnot up-skill at the same time as the
companies the ae supposed to egulate.
Thei appoach could be a patchwok inwhich the codification just gets ewitten
and becomes moe complicated, whilenot being substantivel impoved.Moeove, egulatos could be subject to
patisan political pessues.
A hamonised egulato envionment will
cetainl be a significant advantage tocompanies as the gapple with this, andthe othe ke challenge facing them in the
shot tem, which is access to finance.
The uture o fnancial marketsT
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TThe uture o fnancial markets
imPrOVed Access TO FinAnce
If pogess is made on the Doha tadeageements and potectionism is ashot-tem featue, global capital flows
will continue to incease in volume andvalue. Pogess on tade cannot be takenfo ganted, though. Mau Peipel,
pofesso of leadeship and stategicchange and chaiman, business advisocouncil at IMD, sas: The big issue iswhethe thee eve will be a level, global
plaing field. Since the putative deathof the Doha ound, and given the manlimitations of the WTO, whence will the
global plaing field come? you have anincease in potectionism now with theecession and so thee is competition
among counties.
THE FUTUrE OF FINANCIAL MArKETS
The panel boadl agee that potential
souces of investment will incease,and the souces of best etun willnot necessail be in the West. These
gowing souces of investment and capitalpools will ceate moe oppotunitiesfo businesses and govenments to
access finance. The panellists aguethat these elativel equal foces ofcapital investment souces (suppl) and
moe open and easie access to cedit(demand) will ceate a balance. Theimplication is that competition fo accessto finance will not necessail incease fo
all govenments and businesses. Dilnotsas: yea b ea, the numbe ofpotential destinations fo investment
gow. At the same time, ea b ea the
amount of available finance gows. While
thee will be moe competing pojects,thee will also be moe people geneating
funds that can be used fo investment.
Howeve this access to finance maemain moe difficult fo SMEs thatcannot leveage the esouces andnetwoks that lage copoations can.
Big companies can still access finance;if the cannot go to a bank and get a loanthe ae usuall able to aise copoate
bonds at least. And so the eal sots ofsuvivos of the cisis ae actuall thelage companies that ae able to get
woking capital. Thee ae moe pessueson the small ones going fowad. So thecompetition fo funds pobabl in the
futue will also be moe in the
SME-dominated states, sas Pacek.
What is the ke dive of this specialisation?The impetus fo businesses to make cost
and size savings to compete on a globalscale. This will demand a continuationof scutin of business pocesses causing
the beakdown of the value chain intodiscete pats. relocation of theseelements follows.
This could be analsed as a two-stepsstem:
1 remote woking in a tue wold
of shopkeepes, embacing bothentepeneus and SMEs
2 The copoations of the futue willbe almost an amalgam of specialist
businesses, connected though looseageements and emploing a moeintuitive fom of outsoucing.
A wOrld OF shOPKeePers The
enTrePreneUrs OysTer
Entepeneuialism will be the wave of
the futue: small businesses will act like ashoal of small fish and become a stongglobal foce in the copoate envionment.
Smalle companies can get a big footpintthough collaboation without the same
The corporate ecosystem
hpot n oaboatv a o fu o fo o bu vop, t
tutu a fut ovato.
ne o the big challenges thatwe all ace at the moment istrying to work out how businesswill unction in dierent legaljurisdictions. dont think wecan say or sure what sorts oorganisations there will bebut think we can be pretty surethere will be greater diversity at least or a while as we all fnd
out which business structuresare most successul.
Andrew dilnOT, sT hUghs cOllege,
OxFOrd UniVersiTy
Moe divese. Moe comple. Moe
connected. The spectum of the copoatenetwok in 2030 will shift towads theend of heightened compleit. yet, with an
undestanding of the dives of copoatechanges, ou panel ageed that thiscompleit can be managed.
The copoate ecosstem will becompised of inceasingl vitual ties
that will continue to connect eve moe
specialist and emote businesses.This specialisation of businesses
will complement and accompanspecialisation within egions and cities.This will happen in emeging makets
as the wok thei wa up the valuechain and seek to define thei uniqueselling points (USPs). As Defteios sas:
Counties ae defining thei USPs muchmoe aggessivel than the wouldhave done five eas ago. One can see
egions of the wold, fom a Jodan toan Egpt o Malasia, quickl defining
thei USPs whethe it is a call cente, aphamaceutical hub, a financial sevices
hub, telecoms hub and tade facilit tobe able to seve those who have wealth,like the Gulf counties.
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18
need fo capital, and this will position
entepeneuialism as a cuenc ofgowth in the coming decades.
In the emeging and developingeconomies, entepeneuialism isbeginning to take off. This is epected
to continue, diven b inceasedconnectivit and lowe baies to doingbusiness globall again including
inceased hamonisation of egulationbetween egions. As Chin Kwai Fatt sas:Collaboation is the catchphase fonew businesses. B definition these new
small companies will be shopkeepesbut at the same time the can povideintellectual capital and opeate on a
vitual basis with thei customes o
supplies. So thee could be designessitting somewhee in Singapoe, in
Koea, but eall poviding a sevice tothe manufactuing plants in China.
The esult will be a tue wold ofshopkeepes not dissimila totodas wold that will matue into
small specialised businesses. Andthe connections will be loose andecipocall-stuctued. As Hobda
sas: Individuals and businesses aeinceasingl inteconnected in this digital
age, and the web, combined with newsophisticated devices, is ceating openaccess to a global netwok of patnes,customes, supplies and ideas.
Some panellists ague that the ise ofentepeneuialism will be acceleated
b the wok and life pefeences ofGeneation y, which could see the ise ofa geneation of seial entepeneus. As
Chin Kwai Fatt comments: M view isthat in paticula ou have to look at thedemogaphic tends [to undestand futue
business models]. Those in Geneation
y ae likel to desie moe fleibilit todo the things the want to do, so in that
egad the ma decide to keep theibusinesses small.
FlUid, FlexiBle FederATiOns OF
BUsinesses
Copoate stuctues ae constantlevolving. In the 1950s, the stuctue was
tpified b big hieachical companies,monocultual in pocess and outlook,and with a clea national identit and
headquates. Now, thee is a sense that
the conglomeate model is no longeequied in ode to access capital, with
the eception of famil businesses thatchoose to etain thei independence.
Thee ae a gowing numbe of copoate
stuctues that ae moe fluid andnouished b collaboative netwoks.The esult is a flatte, moe global and
multi-cented model.
B 2030 the success of todas
advanced econom multinationals willno longe est on thei band names andpesence, but on a tue multinational
undestanding of business pacticesin diffeent aeas. Whethe the aea fedeation of business o famil
businesses, to suvive in 2030 the willneed to be cultuall adaptable. Pacekdescibes this in tems of eecutive
talent, saing that lage businesses willneed to be like two-headed monstes,
with sepaate leades fo advanced andemeging makets.
The fluid, fleible fedeations ofbusinesses of the futue ae cultual
chameleons: the have adaptabilitin thei DNA. Diffeent egions havediffeent was of doing business and
cultual undestanding and alignmentwill be a success facto vital fo thesustainable gowth of fedeations
of businesses consisting of moeand close collaboations of small,
specialised businesses. Chaveteplains b compaing business modelsin Asia Pacific with those tpical ofmultinationals fom advanced economies:
In China and Japan thee ae diffeentbusiness stuctues which look moelike a patneship. So the entities wok
togethe based on an ageement thatspecifies what each business is goingto povide. Fom a UK legal pespective
it looks like a patneship, but withgoups of companies that all needto bing togethe component pats.
Howeve, thee is a much tighte bond
in these business stuctues than in amee outsoucing aangement. Thees
a simila ethos, a simila appoach inhow each business is going to do things.Fom a developed wold pespective,
we would see it as a business pullingtogethe a lot of outsouced activities andthen managing that fo us. So it is quite
an inteesting, diffeent appoach. It alsoseems to involve a high degee of cultualadhesion and similait, but also a highdegee of tust.
This is not a baie fo familbusinesses. Thei cultual similait
eplains the stength and etaodinalongevit of the famil business model
which ou panellists epect will continue
to be a dominant featue in the copoatelandscape of 2030. Wad descibeshis obsevations on famil-un Indian
companies: The have benefitted fomthis consistenc, the common values, theelement of es, OK we all make mone
because we ae all a pat of the samebusiness.
Gode agees: Famil business hasalwas been incedibl impotant and Idont think that will change.
Dilnot adds: Thee ae some eall bigbusinesses and the ae still effectivel
famil fims. Not little businesses, butmassive businesses, financial sevices
businesses, development companiesand m impession is that these peoplehave been, and will continue to be,etaodinail successful. In Hong Kong,fo eample, the Hsan Development
Compan is still a lage famil business,as is the Kowloon Moto Bus Compan.
A chAnging FOrm OF
cOllABOrATiOn
In all tpes of businesses, paties
will become tied to othes in closecollaboative ageements, with moe joint
ventue-tpe ageements undepinningtighte contactual elationships than insimple outsoucing, et aligned cultuallin the same diection. As Chavet
sas: We ma see a development ofmoe inteesting joint ventue-tpeaangements. So ou would have a
situation whee two lage companiessee a maket oppotunit, but neithe ofthem wants to take the complete isk.
O one of them bings cetain skills tothe poject and anothe bings othecapabilities. We ma see moe of that
tpe of activit happening, which could
be a ve inteesting development.
Chavet cites the Smat ca as aneample: Smat ca is made up ofcomponents bought togethe unde a
ve loose joint ventue aangement toceate a little ca and the componentsof that ca come fom all ove the wold.
...It is Mecedes that badges it, but if ouask them about it, the would descibe itas fomed in a joint ventue stuctue.
This is a good eample of how
de-conglomeation and specialisationis epected to continue in new
was fo todas advanced econommultinationals. But, cautions Peipel,
The corporate ecosystem T
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where nexT FOr The glOBAl ecOnOmy? 19
TThe corporate ecosystem
THE COrPOrATE ECOSySTEM
specialisation will not mean eclusivit
thee will be multiple clustes in onespecialit and multiple specialities inone egion. The potabilit of people
and infomation, especiall infomationand mone, means that while ou willhave clusteing, thees elativel little
eclusivit. Thee ae elativel fewbaies to most of that clusteing andtpicall thee will be multiple clustes in
one specialit and thee will be multiplespecialities in one egion.
Deconglomeation entails ceating
businesses in which even the basicfunctions that used to be housed undeone oof ae sepaated. A business
ma fam out its accounting, its cash
management, its poduction, itsmaketing, o even sub-functions of
these, in ode to achieve efficiencies.Deconglomeation will evolve into a famoe intuitive fom of outsoucing.
This will be most evident fom changingoutsoucing locations. Businesses will
shift elements of the value chain to theegions of lowest-cost labou fo easonsof cost, scale and qualit. And as Wad
descibes, divesifing outsoucinglocations would have the added
advantage of inceasing the safet netfo businesses: At a eall basic level,ou have to look at the pacticalities.What happens when the Himalaan
glacies all melt and the wate suppl isseiousl pejudiced in India? Thee aesome big what-ifs that suggest if ou
ae going to engage in outsoucing, ouneed to do it in a multidimensional wa.Easten Euope, I think that is undeated
and that is quite inteesting. Also SouthAmeica and the Philippines. Afte 30eas of epeience in outsoucing, I
suspect India is the best place in the
wold to have as ou mainsta, but oudo need to get aound the globe. If ou
do that, ou can also go fo 24 hous,seven das a week. Hobda descibesthis as a fom of outsoucing abitage:People ae outsoucing to new places,
Easten Euope, fo eample. you couldcall it a kind of abitage. Howeve,clients ae now seeing benefits in
qualit and poductivit too, paticulalin India.
The abilit to manage these moe loosel
connected business aangements willagain equie stong cultual fluenc.
yet to amelioate this potential baieto foging business connections, we ae
also likel to see businesses outsouce
to egions that ae cultuall simila.Ou panellists cited this fo the easonbehind a heightened Westen inteest
in Cental and Easten Euope as anoutsoucing destination.
Changes in the speed and scale ofoutsoucing, as well as the location ofoutsoucing, ae also likel b 2030.
Some panellists ague that outsoucingwill continue, albeit at a slowe pacethan we have seen in the past few
eas. This is because, as Estindescibes, man businesses have aleadoutsouced the obvious functions: All the
obvious things ae alead done but asthe diffeence in costs continues to ise in
the US o the UK, as eal wages ise, ouknow a diffeent catego of job is bought
into theat so to speak, so this pocesscontinues in m view, but m guess is ata somewhat slowe ate.
yet in some sectos highe-value wokwill be outsouced moe heavil fo
eample, accountanc and othepofessional sevices and somepanellists ague that public secto jobs
ma also follow the same oute. AsHobda eplains: I think the paadigm of
outsoucing low-value, low-skill wok willbe inceasingl challenged. Fo eample,in application management sevices, Iam seeing high-value achitectue and
development sevices being offshoed toIndia, with the pospect of end-to-enddelive of IT sevices coming fom Pune
o Bangaloe.
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gOVernAnce And AssUrAnce
Westen govenance models havealead changed consideabl in thepast 20 eas shaeholdes aeno longe small individuals but big
institutions and companies. Chavetnotes this change on the LondonStock Echange: Shae capital-based
companies, having taditionall hadindividual investos, toda ae un bve lage businesses. The investos
in companies listed on the FTSE, foeample, ae ve lage entities. That hasbeen the majo change that we saw in
the latte pat of the 20th centu.
Thee is geneal ageement that it is
becoming inceasingl difficult to govensmall businesses, famil businessesand multinationals, because the ae all
becoming moe global. Not onl will theshae simila govenance and assuancechallenges, the will face othe issues
specific to thei business stuctues.
Companies that ae on the cusp of
being pofessionalised ae gettingbigge and becoming tul intenational.Global businesses ae b no means
a new development, et thee mabe shotcomings in undestandingdiffeent cultual business aangements,
ageements and stuctues. Withoutfist confonting this challenge ofundestanding such aangements, how
can the be govened? In paticula,thee is a tendenc in the West tocollapse down dimensions of diffeence,
as Dilnot sas.
It could involve moe isk if new modelsae allowed to sping up without
pocedues in place to ensue popegovenance. In a wold dominated bcomple connections, whee small
businesses establish loose technologicalaffiliations, distibuted suppl chainsand a netwok of shopkeepes, how
is it possible to goven and egulategaduates who set up businesses fomthei student accommodation?
When people come togethe to stat doingbusiness in this wold of shopkeepes,
thee aises the question of how to keep
overnance and government
hpot n fo of ova a aua to aa o fu,
oaboatv bu o. Ba bt t pub to a opoat b to
ov a t oaboat fut to pov pout a v.
tack of who has an aangement with
whom. This is a ve difficult egulatoissue unless the paticipants canself-goven and epot. Loughlin Hicke,global head of ta at KPMG wans: When
ou have a distibuted suppl chain,which ou can do though technolog, oucan have emote woking and encouage
entepeneuship. This is a model that canbe difficult to goven. you then go to thenet stage when people come togethe to
stat a business. How do ou goven that?Well, that is a kind of self-govenance.you then get to the level whee ou stat
to have a poblem companies get so bigthe would benefit fom assistance, butthe do not seek outside help as the have
no tadition of fomal govenance.
The challenges do not disappea as
companies gow. Lage businesses havelots of assets to move aound betweenthei vaious businesses and this pocess
can be ve complicated and had to
map. Companies ma have channelsof communication, but the do not
necessail have the cultues of intenaland etenal scutin to use them.Cultual behavioual esponsibilit needs
to be instilled, togethe with pemissionto challenge all aspects of CSr and notjust fomal pocedues. Othewise, thee
is a dange of sleepwalking accountabilitand not poactive esponsibilit. AsGode comments: It seems to me that
big, old oganisations ae whee it goeswong. People deviating fom the ightpath, I would ague, ae moe easil
picked up when cossing oganisationalboundaies than those within a megacopoate oganisation. I think that theke mistake we make is when we think
that thee is onl one sot of dimensionto govenance we have elected thesepeople theefoe we can tust them.
The task now is to find effective was fospotting ogue behavious inside thesegiant oganisations what we call the
behavioual audit tail.
This can be especiall had in famil
businesses, whee the stakeholdesae not clea o alwas fomalised.The usuall do not ask fo etenal
help because thee is no one neithe
shaeholdes no banks, if the companies
ae cash geneatos and need onltansaction banking, not wokingcapital to make them self-goven. As
Hicke descibes it: The identit of thestakeholdes ou need to look aftein famil businesses is not alwas clea.
you can have big famil companies whoae not looking fo outside shaeholdesand ae not looking to banks. The
question then is how do ou get them to
fomalise self-govenance to pepaethemselves fo difficult decisions, in
paticula, aound the ole of the companin societ and geneational change.
The panel made clea the necessit fogovenance and assuance to evolvesmbioticall with changing business
models and moe comple and inticatewoking aangements.
In the case of small businesses:
thei size will be self-limiting if thedo not adhee to govenance and
assuance policies. Some will each apoint whee, to emain competitive,the will have to join the suppl
chains of lage businesses, eithelinking up o being pat of the chain.As long as an business is pat of a
netwok, that will impose a degee ofgovenance, as Chin Kwai Fatt sas
thei emploees will also equiethem to do the ight thing. Thisetends to govenance and assuance
pocedues. Companies can no longepa lip sevice to things like CSrbecause it will be an impotant facto
in attacting and etaining talent
thee will also come a point whee
these businesses have to makean acquisition, o seek etenalinvestment, and these steps can
pesent a massive hudle. The moveto engage with pofessional advisesin the due diligence pocedues pio
to listing can be taumatic becausethe compan will have to el upon
outsides. No will things becomeeasie in the public aena, whee
eling on outsides becomes thestatus quo.
8/7/2019 world's economy in 2030
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where nexT FOr The glOBAl ecOnOmy? 21GOVErNANCE AND GOVErNMENT
Fo multinationals and lage famil
businesses:
thee is a dange of just falling, oeven just difting, into cisis mode,
as happened in 2008 and 2009
thee will now be moe accountabilit
to thei shaeholdes, the public andthe egulatos.
TOwArds A sysTem OF greATer
selF-gOVernAnce And
resPOnsiBiliTy
Ou panellists saw the solution as
inceasing self-govenance b ceatinga cultue whee the esponsibilit ofdoing the ight thing is embedded
within businesspeople and oganisations.
In this wa, govenance can evolve asbusinesses evolve.
This would addess the challenges ofgovening and assuing those businesses
unde the ada small enough to be ata level at which fomal pocedues havemassive cost and esouce implications.
The answe is small, light-touch andstaightfowad egulation. Ou panellists
see the need fo an inceased sense ofpesonal esponsibilit and govenance
though pinciples-based egulation.The ague that govenments shouldestablish standads clea behavioualbenchmaks fo the majoit and
intevene when thee is a need. The willalso have moe esouces to think aboutand use to addess sstemic isks at both
sectoal and national level.
If ou have a ules-based sstem, the
ule make takes esponsibilit fo havingthe coect ules. Theefoe a cultuegows whee anthing that is not in the
ules is fai game. I think thats a eall
dangeous place to go, Hicke wans.
The idea of ensuing that the thinkingis not devolved is impotant, and oneou panellists ageed is moe likelto take place within a pinciples-
based famewok. As Gode sas:In oganisations ou need not onlthe fomal accountabilit of who has
been elected, but ou also need a kindof behavioual challenge. you needoganisations and cultues to be assued
b the knowledge that anbod can sa
to anbod, I think that is a sill idea,o Wh on eath ae we doing this?
And oganisations need to be moetanspaent so that the public can sa
Wh on eath ae ou doing that? But
thee is also a need to be caeful thategulation does not just favou the lageand buden the small.
This is pat of a big debate cuentl, andthee will be a tendenc fo a while fo
it to be enfoced in the aftemath of thefailue in some pat of the egulatos topevent banks fom accumulating such
high levels of toic assets. So govenmentswill be foced to step in and mico-managebecause the do not want to be seen
to have failed. And thee is cetainl aneed fo moe innovation aound how tofomall goven and assue these moe
loose confedeations of small businessesconnected though emote woking.
Some panellists also comment that
enfocement should not be too sevee.But to emain in businesses in 2030,plaes will have to plan fo it. As Hicke
sas: The tipping point of getting itwong is just so fightening that peoplewould ove-egulate to eliminate the isks
o the would stop doing business as theisks outweigh the ewads.
This could be accomplished b efomof the ta sstem. Hicke suggests an
innovative and inteesting appoach:The ideal business model fo me wouldinvolve businesses egisteing with thegovenment as soon as the ae set up.
The govenment would do two things:one, enol the business into the tasstem, and two, offe to take on the
basic business papewok.
Effectivel, the business would un an
outsouce model with the govenmentb giving complete access to businessecods. The govenment would be
heavil involved in the pocess and take
the esponsibilit fo getting it ight.Whethe this model will take off, Im not
sue, but the moe infomation that getsepoted to govenment agencies, themoe logical it becomes. In some was, it
is the net logical step fom whee someta authoities ae moving which is thepe-population of ta etuns based on
infomation alead held. The advantageis that it enols tapaes into the tasstem fom an eal stage and keepsthem compliant and safe fom penalties
fo non-compliance. The geate the
elationship between govenment,businesses and citizens, the moe likel
ou ae to see tust being built up. Thiswill be an asset when a business gets
big enough to take on its own accounting
and epoting esponsibilities.
This would be a significant step change,
positioning the public secto almost asa povide of accountanc sevices fosmall tades, offeing assuance fo
cedit puposes and faud. The one-stop-shop facilit would be attactive fo smallbusinesses, enabling them to egiste moe
easil. A single egulato offeing incometa, sales ta, compan egistation andIP would be opeating, effectivel, as an
agent fo geneal business affais.
This fom of encouaging poductive
business and, paticulal, tade withconsumption-based ta models (most
usuall epessed in Value Added Ta) ceates an audit tail, albeit withbueaucatic inputting and outputting.
Hobda suggests anothe development,
that of an audito of suppl chains:Mabe thee is a ole that sas, I am theaccountant of this suppl chain, not the
accountant to the oganisation. It mightbe quite inteesting.
shiFTing sAnds BeTween The
PUBlic And PriVATe secTOrs
The rOle OF The sTATe in 2030Ou panellists unanimousl ageed thatthe pessues on govenments toda willcontinue to intensif, this will occu as:
concuent with the ise of absolutewealth in egions aound the wold,
the demand fo good-qualit socialsevices will incease. Thee will beadded pessue in aeas whee the
state has taditionall povided healthand social cae
population is likel to ise, paticulal
in the developing egions. Theewill be spectacula gowth in someegions, as infant motalit dops
in some places thee ae likel tobe sevee demogaphic imbalances,
with ageing populations in thedeveloped wold and a outh-bulge inothe aeas
continued ises in longevit willplace additional pessue onwelfae sstems
the eve pesent epectation will
fall on the public secto to continuepoviding good-qualit seviceswithout inceasing taes. This will alsoequie impoved delive of sevices.
Tovernance and government
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22
At the cu of this hadship is that the
public secto in diffeent egions willhave to do moe with less. The state willeach a tipping point. This will equie a
ethink of how the public secto opeates,and how the public and pivate sectoswok togethe to ovecome the pessues
on demand.
Ou panellists have etemel divegent
views on the likel futue ole of the publicsecto and thee ae two clea schools ofthought emeging. This is based upon thebalance between the thee diffeent
social esponsibilities that ou panellistssee that govenments possess:
poviding the ight envionment fo
businesses
collaboating moe closel with thepivate secto as a delive patne
egulating and govening the pivatesecto.
Some panellists see the govenmentsole in 2030 as pimail being acombination of the fist two activities,
making the public secto a chieffacilitato of business. Othes see itas a combination of the second two,
positioning the public secto as acopoate policeman.
Some panellists ague that thee willbe a bluing of the lines betweenowneship, function and delive, leading
to a convegence of all thee oles ofgovenment. The closest eampleswe have of this can be seen in thephenomenal gowth of soveeign wealth
funds in some egions, and in othes,the inceasing numbe of publicpivatepatneships. Both of these encouage
overnance and governmentT
the pivate secto to self-goven and
the public secto to focus moe closelon measuing its delive to customes.The esult is to mege thei commecial
and social esponsibilities in a cohesiveappoach that suggests the futuedevelopment of moe fluid appoaches.
Howeve, this moe cohesive appoachinvolves poviding the ight envionment
including egulation and wokingtogethe ceativel to delive sevices.This ole is about woking togethe topovide the infastuctue facilitato to
ceate the appopiate atmosphee fobusiness to develop and to pomotebusiness-fiendl, po-gowth initiatives.
This ole ma also include poviding
investment in the appopiate aeas tostimulate copoate gowth, to use ta
incentives and to povide a suitableegulato envionment.
As Chin Kwai Fatt comments: I see thepublic secto as the chief facilitato ofbusiness in the futue. B that I mean
the could povide the infastuctue tobuild the pots and the oads, and thenthe pivate secto could use these to
gain an advantage in business. I thinkthat the public secto would, in 2030,
pla a moe active ole in patneingwith businesses to facilitate developmento gowth b poviding the ightenvionment and the ight infastuctue.
If ou look at most of the emegingmakets, the eason wh the developfast, the eason wh Bazil, russia, India
and China ae whee the ae toda,is because the govenment has beenactive in what I call business-fiendl,
po-gowth initiatives, though eitheinvestments, incentives, infastuctue othough investment in education.
1 and 2 =Govenmentas the chief
facilitato of
business
2 and 3 =
Govenment asthe copoatepoliceman
1 Pov t t vot fo
bu
2 coaboat o o t
t pvat to a a v
pat
3 ruat a ov t
pvat to
The emphasis should be on finding
was to incease ceative was ofwoking with the pivate secto theewill be long-tem coopeation including
much moe govenment involvementin business but not to the etent ofnationalisation, which is the cisis mode
in the West.
Hicke sas: Business needs to have
a esponsibilit fo good govenance,and govenments need esponsibilitfo allowing good business. If ou thinkabout counties like China, thee is an
ethos of govenment intevention toensue that activities in the copoatewold ae done at the ight pace fo
the ight pupose. Thee is an implied
contact in China between the peopleand the govenment in tems of feedom
to opeate within an ageed famewok.While that ma be paticula to China,in m view govenments should become
moe business-like and businessesshould take on cetain copoate socialesponsibilities. I think that this is whee
we will end up.
The need is to make govenments
moe awae and esponsive in theidealings with business, whethe though
collaboations such as public pivatepatneships (PPPs) o diect stateintevention in business egulation. Theshould essentiall be woking on simila
things because thei activities ae notwholl diffeent and govenments willhave insight into what is going on.
The medium-tem changes seen in the UKpublic secto ae indicative of this tend
of patneship in delive. B Janua2008 thee wee ove 500 opeationalPPP pojects with a total capital value of
F 4: C T F T
8/7/2019 world's economy in 2030
23/28
where nexT FOr The glOBAl ecOnOmy? 23
Tovernance and government
GOVErNANCE AND GOVErNMENT
Pub
to
Pvat
to
F 5: T T CF FCTT F
The inceasingl ovelapping oles ofthe public and pivate secto
Pub
to
Pvat
to
F 6: T T CT C
Inceasing divegence in the oles ofthe public and pivate sectos
aound 44bn and a futhe numbe
in the pipeline. Thei scope was alsowidened, with a highe popotion used tobuild new schools and hospitals.
A second scenaio is noted b othepanellists, who epect the govenment
to pla a moe active ole as a efeee,because ultimatel the govenment can beheld accountable. Estan Gende sas:you need the govenment as a egulato
and I think that votes have ealised this.And so we will see in decades to come,govenments plaing a moe active ole as
a efeee. Because at the end of the da,the govenment is held esponsible b thevotes if evething goes wong. So I think
that thee will be moe involvement, andI dont epect the baies between thesetwo sectos to disappea. On the conta.
It is agued that govenments andbusinesses ae essentiall diffeent and
often mutuall hostile species. Thepublic and pivate sectos will alwashave to wok quite sepaatel and it is
impotant fo this to emain the caseto eflect thei fundamentall diffeentaims and puposes. As Estin sas: The
pivate secto is diven fundamentallb pofit. The state secto... lets sa bsevice povision: the have paticula,
specificall set objectives. And Ithink it is modeatel had fo these
things to wok in tandem. I think thatpublicpivate patneships that peoplewee ve ecited about sot of failed fove pedictable easons.
Howeve, ou panellists ague that closepublic and pivate patneships ma bemoe likel in some places and that
this could stimulate gowth. As Peipelsas: Look at the Middle East, possiblChina, Nigeia, with egad to the
national oil companies, places whee the
state has made a clea statement, a cleainvestment, o in some cases, a kind of
nationalisation. The ae saing es, thisis fo the benefit of the count; its noteall about pivate entepise and then
in some cases the go and pla it likea pivate entepise. In these countiesthe do have an advantage, of couse,
because the have the law on thei side,unlike Westen counties o maketswhee the copoate plaes ae not
connected to a govenment.
In this view, govenment intevention is
moe of a shot-tem need, poviding asafe habou in a stom. But thee willbe moe conflict between them as theewill be moe po