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Global Challenges in International Political Analysis 2013
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Bio
The authorOlga Gil, Ph.D@olgaghttp://www.linkedin.com/in/olgagil
• Global Economic Trends• Emerging Market Multinationals• Dictatorship, Democracy, failed States • New Demography: aging, migration, obesity
• Inequality and Poverty• Sustainability• Global Powers• Uncertainty and Complexity•Life expectancy
@Olga [email protected]
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Turning points“veritable game changers, inflexions that transform human societies”
Mauro Guillén and Emilio Ontiveros
A new set of constrains and opportunitiesThe rise of emerging economies, population aging, urbanization,
governmental gridlock and breakdown of state authority, deepening inequalities, environmental degradation and the
reconfiguration of global power relationships
@Olga [email protected]
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Global Economy out of Balance• Most large economies -except Germany and Japan- are running trade deficits• Most emerging economies are running trade surpluses• Emerging economies own 2/3 of foreign exchange reserves and accumulate two billion dollars each day• After two decades of intense economic growth, emerging economies represent half of global economic activity• Emerging economies are providing the financing for the large current account deficits in the high-income countries
@Olga [email protected]
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Emerging market multinationals expanding like wildfire
@Olga [email protected]
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Photo: Callison Global en Flickr: http://www.flickr.com/photos/67615472@N08/7983925792/
Emerging market multinationals expanding like wildfire
In 2010 they represent
• 25 per cent of the largest 500 companies in the world • 29 per cent of the number of multinational firms• 41 per cent of new foreign direct investment flows over the previous five years
@Olga [email protected]
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Demographic conditions change fast
@Olga [email protected]
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Photo: http://www.flickr.com/photos/naromeel/4697526793/
http://www.flickr.com/photos/richardharrod/475546644/
Demographic conditions change fast
• Japan and several Western countries have inverted age pyramids with more people over 60 than below 20 • More people live in cities than in the countryside• Greater numbers suffer from obesity (1 Bn) than from hunger (800 million)
@Olga [email protected]
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Uncertain political landscape
• Chaos and anarchy in many parts of the world• From the first time since World War II more countries are affected from state failure than ruled by dictators (nearly 50 countries including Chad, Congo, India, Iraq, Mexico...)
• General decline in capacity and legitimacy of the state
@Olga [email protected]
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Economic disparity
• Income inequality across countries has decreased since 2000 due to the rise of emerging economies • But inequality within countries increases, posing problems to developed and developing countries alike• Growing lack of competitiveness of rich-country firms relative to emerging market multinationals
@Olga [email protected]
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Quest for Sustainability
• Growth in emerging economies hand in hand with environmental degradation• Energy, green production, consumption of goods and services are targets• Technology and behavioral change as solutions?• Water and food scarcity
@Olga [email protected]
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The Challenge
The world needs new approaches to global governance to deal with complexity, uncertainty and the interconnecteness of the global economy
@Olga [email protected]
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XXI CenturyDifferent kind of globalization
Emerging economies and many poor countries are increasingly participants in a more intercomented global economic system
World TurningPoints
TechnologyAfrica 16 million people with mobiles by 2000500 million and 70% of the population by 2010LATAM has reached levels of mobile phone use
compared to Europe
XXI CenturyDifferent kind of globalization
Emerging economies and many poor countries participants in a more interconnected global economic system
The rise of the BRICKs and the MINTsBRICKs Brazil, Russia, India, ChinaMINTs Mexico, Indonesia, Nigeria, Turkey, South AfricaDuring the first decade of the XXI century emerging economies grew
at an average annual rate of 8-9 per cent compared to 2-3 per cent for most developed economies
World TurningPoints
XXI CenturyThe rise of the BRICKs and the MINTs
GDP share OCDE countries versus non OCDE (1990-2030)
World TurningPoints
XXI CenturyThe most complex crisis in history?Putting public finances to the test
The global financial crisis starting in 2007 as a consecuence “of the global economy” –complex web of linkages between economic and financial activity (Guillén and Suarez 2010)
The financial debacle: The 2008 perfect storm
Size of global integration of finantial operatorsRisk management practicesFailures of finantial regulatorsDubioud workings of rating agencies
The original liquidity crisis mutated into a general crisis of confidence affecting bank lending, corporate investment, and job creation
World TurningPoints
XXI Century CrisisChallenging assumptions underpining growth
From the Second World War:
• The role of fiscal and monetary policy• The welfare state• International monetary cooperation• Shook assumptions about how actors make
economic decisions: “animal spirits” (Akerlof & Schiller 2010)
World TurningPoints
XXI CenturyGDP Decline in OCDE countries
All OCDE countries suffered from at least two quarters of economic decline. The crisis affects rich countries, deeply in debt and fearing for the stability of their currencies.
World TurningPoints
XXI Century CrisisParticularly severe: The Crisis in Europe
Putting at risks the accomplishments of European integration:
• The monetary union created in 1999 • Indicators of public finances in Europe are no
worse than for the US or Japan• However, soaring risk premiums for Euro Bonds
means that investors does not like the lack of fiscal union
The original liquidity crisis mutated into a general crisis of confidence affecting bank lending, corporate investment, and job creation
World TurningPoints
XXI Century CrisisResilience of emerging economies
Despite the suffering of sharp and temporary decline in commodity prices…
• Low levels of external debt • Accumulation of foreign reserves:
China 3.2 trillion dollarsSaudi Arabia 517 billionRussia 473 billionBrazil 348 billionIndia 280 billion
Emerging economies become part of the solution to the crisis providing capital to rich economies: the relatively poor funding the rich
World TurningPoints
XXI Century Crisis
Emerging economies: The relatively poor funding the rich, and increasing their influence and bargaining power – as they see their share of global production to increase.
World TurningPoints
XXI Century CrisisResilience of emerged economies
Public debt figures in advanced and emerging economies
World TurningPoints
XXI Century CrisisFears
• FDI and Mergers and adquisitions by multinationals declining sharply
• Global protecionism: tariffs or currency wars, and one of the main contributors to the Great Depression
• Relative undervaluation of the renminbi to the dollar, representing a trade barrier given China trade surplus
World TurningPoints
XXI Century CrisisChanges: global economic power
Acceleration of changes in the distribution of global economic and financial power
• Uncertainty• Volatility in financial markets• Race to control natural and energy resources
Before 2020 projections indicate that China will be the largest economy, followed by US, India, Brazil and Japan, with no European economy
ranking in the world top 5
World TurningPoints
XXI Century CrisisEurope and the United States
Erosion of the growth potential of many advanced economies
• Persistent high unemployment : young and older groups
• Heavy debt burden: tax increases and reduction in government services
• Years of financial deleveraging and capital expenses as banks clean balance sheets
• US 100 years dominance in R&D jeopardized: hegemony on the decline
China and India educate more than 700.000 engineers annually. In the wind power high tech field four of the 10 largest turbine manufacturers are chineese, one
Indian
World TurningPoints
XXI Century Crisis Declining European exports
Yet not too bad for Spain: suffers the smallest drop among the six major European vendors (Germany, Holland, France, Italy, Belgium)
World TurningPoints
France 3,85% to 3,14 % 6th Italy 3,4% to 2,76 % from 6th to 9th Germany from 1sr to 3rd
Spain 1,76% to 1,70 % (-9 %)
World exports ranking 2008 -2012
World Trade Organization 2013
Lower labor costs, productivity gains, labor adjustment, more flexible working conditions and lower absenteeism
XXI Century CrisisSome Spanish Strengths
Export base growth and diversification (2008-2012)
Growth of the export base 2008 101.400 export firms 2012 136.000 export firms
Geographic diversification2008 68% of exports to the euro zone2012 55% of exports to the euro zone
World TurningPoints
XXI Century Crisis Emerging markets export growth
World TurningPoints
South Korea 2,63 % to 3,02 % from 12 to 7 th China 8,9 % to 11 % from 2 to 1st
Saudi Arabia 2,14 % Tailand 1,3 %
World exports ranking 2008 -2012
World Trade Organization 2013
XXI Century Outlook
World TurningPoints Opportunities
http://www.ted.com/talks/hans_rosling_at_state.html
XXI Century Outlook
World TurningPoints
Opportunities
http://www.ted.com/talks/hans_rosling_at_state.htmlVisual graph: http://tinyurl.com/cdx9ywq
XXI Century Outlook
World TurningPoints
China, EU, India, USA
http://www.ted.com/talks/hans_rosling_at_state.htmlGraph: China’s provinces, the states of India and USA and the countries of the European Union in ONE graph.
XXI Century Outlook
World TurningPoints
“Stop calling them developing countries”
http://www.ted.com/talks/hans_rosling_at_state.htmlVisual graph: http://tinyurl.com/cdx9ywq
Hans Rosling
XXI Century Outlook
World TurningPoints
Challenges
Hans Rosling
Guillén, Mauro, and Ontiveros, Emilio. 2012. Global Turning Points. . New York. Cambridge University Press
Krastev, Ivan. Can democracy exist without trust?. TED Talk [http://www.ted.com/talks/ivan_krastev_can_democracy_exist_without_trust.html]
Rosling, Hans. 2009. Let my data set change your mind set. http://www.ted.com/talks/hans_rosling_at_state.html
Créditos imágenes y fotografía, referenciados en cada foto, Olga Gil. YouTube y también en: http://www.flickr.com/photos/shutterbri/4843301063/
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