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Future of Emerging Markets - Keynote Speaker
Unsustainable population growth
One billion children will become consumers in the next 15 years – the biggest jump in human history.
Today in Africa 350 million children see glimpses of your lifestyle and compare this to their own, surviving on less than $3 a day. Most of them will spend their entire adult lives living in cities, chasing dreams of wealth.
By 2025, most people on the planet will be in Asia.
85% of the world’s population will be living in emerging markets or today’s developing countries by then, mostly in cities.
Only 1 in 7 will be in today’s developed nations, driving less than 10% of the world’s economic growth.
As a Futurist Keynote Speaker working with over 400 of the world's largest companies, and with governments, what do I tell them about when it comes to big risks and opportunities?
11 billion population by 2070
More than 9 billion people will be
living on earth by 2040, around 2 billion more than in 2014, despite the fact
that the number of children born per couple globally has already fallen to only
2.4 (replacement level is around 2.2).
Many experts predicted that population
would peak at just over 9 billion by 2050, but African nations like Nigeria
still have far higher birth rates than those models assumed. We could see as
many as 11 billion people on earth by 2100.
Many nations have young populations,
that is, with up to 50% of their population under 25 years old.
Even if there
is not a single baby born in these communities over the next 20 years, this one
age-bulge guarantees a boom in the number of parents over the same period –
barring global plague or a catastrophic world war.
How to provide food, water and a good life for 9 billion people
A huge challenge will be to feed,
clothe, shelter, power up and water even 9 billion people without destroying
the planet, especially with economic growth and increasing personal incomes.
Population growth cannot be slowed
suddenly without creating other crises, with huge population bulges of elderly
people that will dwarf the problems faced in Europe or Japan today.
Expect 1
billion people over the age of 60 by 2025, and 1 million people over 90 in
Italy alone by 2026 - enough to alter the outcomes of every election.
Vast populations are on the move
Around 1.5 billion people will be drawn
to cities over the next three decades, in search of a better life.
Over 300
million people will migrate from rural areas to cities in China alone over the
next 25 years, 300 million in India, and a further 475 million across Africa.
Half the world’s GDP growth over the next 20 years will come from around 450
cities in emerging markets, mostly places that global executives have never
heard of, often in nations they have never visited.
These cities will create the world’s
greatest new markets, with hundreds of millions of new city retailers – many of
whom will be street traders. Tens of millions of new car repair workshops,
furniture makers, air-conditioning installers, fast-food sellers.
This growth will generate clusters of
new global companies. Over half of the world’s largest 500 corporations will be
based in emerging markets by 2035, compared to just 5% in 2000.
Wealth contrasts will drive migration
When a third of the entire human race
lacks basic necessities, such as running water, basic sanitation, and adequate
food, it is hardly surprising that these people want to move to where such
things are taken for granted.
More than half our world is living on less than
$3 a day, and 22,000 children die each day from poverty.
Nearly 1 billion
people cannot read or write.
Every day around 840 million are hungry. Almost
one in three of those in the least developed countries die before the age of
40.
Vast wealth inequalities will drive huge revolutionary forces
The wealthiest 1% in our world own 50%
of the world’s wealth and 20% own 75% - their income per head is 60 times that
of the poorest 20%, and the gap is increasing rapidly.
Expect contrasts to keep growing over the next 30 years until 1% in the world own 60-65%. This issue is the greatest moral challenge to the future of humanity and the greatest threat to peaceful existence.
The richest 80 people on
earth own as much wealth as the poorest 3.4 billion people.
Around 1,600
billionaires own $6.4 trillion, more than the combined income of the poorest
120 countries in the world.
In America, the wealth owned by the top 3% in the
country rose from 51.8 to 54.4% between 2007 and 2013 while the share held by
the bottom 90% fell from 33.2% to 24.7%.
And the same kind of shift has taken
place in most other developed nations.
The contrasts are greatest in rapidly
growing cities. In Mumbai, for example, in the shadow of the most expensive
real estate in the world, you will find slum dwellers in shacks of plastic and
plywood, and street pavements crowded with sleeping workers at night.
If just 0.1% of low-income migrants
become politically motivated and organised the result will be new protest
movements and revolutionary forces that will dwarf anything our world has ever seen.
As in the past, such movements will mainly be seen inside nations against their own privileged class, coupled with settling old tribal / cultural grievances.... but also influencing far beyond.
Every large corporation should take note: expect closer public scrutiny, rapid mood changes, and severe judgment on companies that are seen to be irresponsible, corrupt, too powerful, unethical or uncaring.
Living in cities will be what almost all people do
More than half the world already lives
in cities, of which a large number are megacities of more than 10 million
people.
A decade or more ago, many forecasters came out with wild, idiotic
statements about declining cities. They claimed that many millions of wealthier
people would move to rural areas, working virtually, driven away by noise,
pollution, house prices and fear of violent crime.
It was obvious to me then that this was
nonsense.
As we have already seen, people love being in busy communities.
They
love the buzz of cities, the range of opportunities, bars, cafes, clubs,
restaurants, cinemas and theatres.
And crime rates in many cities have fallen
significantly.
Cities are good for the environment: they pack people into small
areas, protecting countryside from sprawling destruction.
Cities are very
efficient, with smaller distances from work to home, school to home, shops to
home, home to hospital and major economies of scale for rail or roads.
A billion live in city slums - but most slums are changing rapidly
In most emerging market cities a taxi
driver can drive you in 15-30 minutes from a smart hotel district to jam-packed
slums, where makeshift homes rise precariously to three or four stories.
Take a
walk down dark and narrow pot-holed streets.
You will see children and animals
playing in open sewers, stagnant streams blocked by piles of stinking rubbish,
tangles of electric cables strung from house to house, no running water, few
pit toilets, disease and deprivation.
Yet if you have the privilege to be
invited as a guest into such homes you will usually find immaculately kept
rooms, mobile tech, well-educated, ambitious young people, and maybe parents
with professional qualifications.
Come back in a decade and most of those
slums areas you visited will be steadily developing into emerging middle-class
districts, with concrete homes, running water and sewage. But another million
new people may have arrived, building new shacks, and so the city growth
continues.
Some slum-dwellers becoming millionaires
Urbanisation is creating real estate
millionaires in what were urban slum districts – people who built informal
dwellings on land some time ago, and somehow gained land rights, surrounded
gradually by high-rise blocks of smart new apartments.
More than 2 billion people will find
themselves empowered by new wealth over the next 25 years, with more choices,
better access to health care, online media, e-commerce, financial services, and
so on.
At least 1 billion will be first-generation middle class – first to go
to university; first to own a car; first to take regular holidays or own
property.
Limits to megacity growth
Many megacities are likely to plateau in
size at around 20-25 million people, as infrastructure limitations start making
life unpleasant.
So for every million low-wage migrants that arrive, another
million middle-class workers will leave for smaller cities or town in nearby
areas.
And the process of rural migration will end when the great majority have
already left for cities.
This is already the case in Brazil, for example, where
cities like Rio de Janeiro are no longer being hit to the same extent by large
waves of new migration into densely packed favelas.
Mega-infrastructure spending and commodity
instability
Megacities will need more
mega-facilities.
Expect more new investment in infrastructure from 2020 to 2055
than in all human history - schools, hospitals, power stations, national grids,
water supplies, sewage treatment, roads, railways and airports.
Linked to this, we will see many booms
and busts in real estate, construction and commodities.
Rapid urbanisation will create
instability and chaos at times in commodity markets such as steel, copper or
aluminium.
Commodity crises - price boom and bust
Expect many more large price spikes and falls as speculators try to
cash in on uncertainty.
Steel prices will be affected by real estate booms and
busts in China, and by global overcapacity, with 1.6 trillion tons a year
produced.
China uses twice as much steel as India, America and the EU combined.
Mining companies will be forced to mine
deeper for lower quality ores, and will need to take a 40-50-year view of
prices, to recoup investment.
As commodity prices rise, waste (slag) heaps will
be re-mined to extract additional material. China will snap up mining rights,
mining companies and mining technologies.
Countries with the greatest mining
wealth will be forced to spend more on armies and internal security. They will
be more likely to have ultra-wealthy leaders, see huge finance siphoned out of
the nation, to have a corrupt judiciary and to experience civil wars.
They will also be more likely to have
under-performing economies, because exchange rates rise as soon as commodities
start to be exported. And as soon as that happens, every other exported good
and service becomes less competitive, so the rest of the economy suffers.
Impact of infrastructure spending will last 10,000 years
Much of this infrastructure will last
far longer than most people think.
The impact of each growing city on the
landscape will be clearly visible for at least 30,000-50,000 years into the
future, even if that city is abandoned or destroyed for some reason.
Many of
our new motorways, railway cuttings, embankments, quarries, tunnels and sea
ports will be used by travellers or traders for thousands of years.
Consider
that many Roman roads built 2000 years ago are still busy highways today. Many
Stone Age earthworks are also clearly visible in rural areas, even though they
were abandoned 5000 years ago.
Extract from Patrick Dixon's Futurist book: The Future of Almost Everything.
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