MAPPING WORLD FOR THE SECOND DEACDE OF THE 21st CENTURY
An ensuing question that engulfs the general perception at the dawn of the new decade of the 21st century is how will be the next ten years? The world at the stroke of midnight of 31st December will turn its back on the naughty noughties and its years of economic calaminty ,ill-judged war, terrorism and man-made climate change and churn forward into yet another decade. It’s risky to name a decade and is as difficult as naming the children by his/her parent. Naming also entails high degree of subjectivity. Japan named its two decades since 1980’s as the “Lost Decades’. It’s equally dangerous to forecast the future as John Kenneth Galbraith stated that “ the only function of economic forecasting is to make astrology more respectable” and so holds with other forms of forecasting as well. The good news about 2010 is that the world will emerge from the recession and the post-crisis economic landscape will become clearer. Less cheerful is what that landscape will look like. The rich world burdened by debt and high unemployment faces a long ,bleak return to recovery. The emerging markets lead by China, India, Brazil however , will stride forward .China’s position will be central to almost every global issue in the next decade from economics, global politics, nuclear diplomacy to climate change. G-20 will successfully replace G-8 as the central International decision making club. These are certain events which will forcefully dominate the international arena. Nevertheless, the possibility of major miscarriages do and always hinges in the background of the international relations.
The United States of America, the supreme power of the last century will enter the new decade with a whiff of pessimism. With heavily bloated budget deficits, the looming high rates of unemployment , the political tiff in the form of resistance to war against Afghanistan will further complicates the future. Alfred Marshall, a Victorian Economist noted “The commercial storm leaves its path strewn with ruin. When it is over ,there is calm but a dull, heavy calm” in relation to financial crisis. That hints at the pessimistic way to approach the new decade. But the fact that USA is still the world’s largest and richest economy coupled with the dynamic leadership of President Obama is sure to sooner or later steer clear of this rowdy economic weather. Optimists hope that sooner the world economy will steer into a V-shaped economic recovery. The island nation and the erstwhile supreme power of the Gold-standard world-Great Britain , with its large financial sector and its love for property speculation , was supposed to be the big economy most vulnerable to the global financial crisis and in terms of Government’s own budget this turned out to be true. But looking at the Britain economy more broadly and especially at the surprising resilience of both consumer spending and business sentiment , it seems Britain has fared slightly better than the past records of financial crisis. Gordon Brown’s recession will have been less painful than Thatcher recession of 1979-81, after which unemployment doubled to 11.9% as against assuming the present jobless rate peak at around 9%. Decline in GDP of 5.9% from peak to trough was slightly better than 1979-81 decline of 6%. However, Britain will witness a major political shift in the next decade. The Conservatives lead by the Tory leader David Cameron will in all probability replace PM Gordon Brown in elections next year. The alibi of the labour that the Torries opposed the fiscal stimulus that propelled the economy to recovery would not help Gordon Brown much as disenchantment with the labor , the lure of change and residual anger over the parliamentary expenses furore of 2009 still looms large. Europe will embrace the unique opportunity in the next decade when the Lisbon Treaty(now ratified by all the 27 members of the EU) becomes a law . The said law would face stiff opposition from the Britain’s conservative party (which looks set ready to take power in 2010) .Nevertheless, David Cameron will take great pains to avoid that row as he has greater ambitions and Britain has more serious challenges to deal with. The European Parliament may fight with the commission and the council of ministers bent on extending its power in spite of its weak democratic mandate. Hence, the daunting task ahead of EU will be to provide more credibility to its identity in the years ahead . Japan , the land of rising sun and currently the second largest economy is set to face certain daunting challenges in the next decade. The high dependency ratio in Japan with aging population coupled with almost two decades of deflation hints at the challenges before the newly elected government of Yukio Hatoyama. Japan’s future generations are heavily indebted under the pressure of huge borrowings, lack of stronger welfare systems and its businesses(in spite of being armed with its flair for the legendary innovation and design as encapsulated by Nissan soon to be launched), is often a slow-moving gerontocracy, inhibiting the ability of the creative individuals to make decisions. What Japan really needs is once-in-a-generation change in business management as happened in politics in 2009.Close to Japan and erstwhile its colonies, the Korean Peninsula ever since their division at the end of the second world war have been locked in fierce rivalry .The relations between the two seem to be far more tenser in the next decade. North Korea seems adamant and is ploughing ahead with its nuclear weapons programme. Its dictorial leader Kim Jong II may be slowly dying of multiple illnesses. There is skepticism about the dynastic succession going awry thereby endangering the stability of the entire Korean peninsula. South Korea will be hosting the G-20 summit in November 2010 .As the first Asian country since the onset of the Global Financial crisis to take up the group’s rotating chair , the South Korea will be able to show its role in catalyzing the growth momentum. The Dragon is all set to roar into the next decade with two major goal posts :It will overtake Japan to become the world’s second largest economy (at market exchange rates) and its exports will reach 10% of world trade. Analysts forecast that the country’s growth is expected to slow down from about 10% -plus pace at present to around 7% in the next few years. Its overall dependency on export is also expected to decelerate as a consequence of present financial crisis .China will also be under heavy international pressure to allow the yuan to climb against the dollar .All this will help to reduce the trade surplus of China but will definitely allow the nation to tread on the path of sustainable growth .The country is instead going to face a major challenge when it reaches the peak of its “demographic dividend” in the next year. Thereafter, the nation will have to beef up the welfare schemes in the form of health and pension plans to neutralize the effects of high dependency ratio and to improve the state of affairs summarized by the formula “4-2-1”:four grandparents , two parents and one child. China will seriously need to refocus on its “one-child” policy to ease the pent up demand of the labor force requirement by 2030 when its population will peak. It is expected to emerge as one of the key players in G-2 (encompassing USA and China )to mould foreign relations. Australia was one of the few countries to weather the global downturn without slipping into recession in 2009. This will strengthen PM Kevin Rudd’s position in the general elections due in 2010. The country is also sure to benefit in the arena of international affairs .The economy will benefit from energy exports to China. Yet China will present Mr. Rudd with tough foreign policy challenges and an obstacle to his vision of an Asia pacific community in the next decade. Indonesia is soon to emerge as an important international player with its robust economy and further strengthened by securing its position as a strong G-20 participant under the leadership of president Susilo Bambang Yudhoyono. India is sure to emerge as a powerful emerging power capable to steer the world economy. As an important participant in G-20 and Copenhagen Summit, the elephant nation has already started to make the world feel its presence. India was one of the economy that weathered the global financial crisis accentuated by the downfall of legendary Lehman Brothers in September 2008 on the strength of its rural demand , well managed financial system and its restricted dependency on the foreign market. It is poised to witness a dramatic sectorial shift in next decade with the manufacturing sector overtaking the agriculture for the first time in its modern economic history. Optimists predict that the nation would soon regain its lost 18th century glory of being an important manufacturing hub of the world. The nation would however face severe challenges in terms of mitigating poverty, malnutrition and economic disparity well into next decade. We can however, expect that India would definitely take up a leading role as the regional head of South Asia(a region severely crumbled up with multitudes of economic , social and political problems). Pakistan’s future is expected to be much trickier in the next decade. The country would definitely face problems in the wake of its dual and differentiated policy towards dealing with Pakistan –Taliban and Afghanistan Taliban. It will face political problems in the wake of resistance between the President and the military .The enhanced war effort by USA in Afghanistan and North west frontier of Pakistan is surely going to complicate matters. Increased diplomacy would be the only way forward. Afghanistan- one of the most war ridden region in the world is destined to face severe challenges next decade. United States mandate to withdraw US and NATO forces from Afghanistan combined with the highly objectionable election of President Ahmadinejad and the distress relations between the different tribal provinces in Afghanistan paints a bleak picture for the region. The devoted efforts of India in the form of social and economic infrastructure development and sincere efforts by United States to restore democracy in the region would help to mitigate the Afghans distress to limited extent . Iran would seem quite unpredictable in the next decade. The probability of Islamic republic reasserting its authority over Iranian people and whether it would face severe UN sanctions against its continuance with its ambitious nuclear armament enrichment programme would draw major attention. The conflict between the Israel and Palestine seem less settled in the next decade. With Israel continuing its construction into West Bank and USA under Barack Obama failing to take a staunch stance in either case, the probability of peace seems far stretched and opaque. Iraq would enter into the new decade with the general elections due by January end next year. Also if United States goes by the timetable , the country would witness the retreat of USA and NATO forces by August 2010 and it would be interesting to see whether Iraq would be able to establish itself as an independent sovereign country (which in all probability seems bleak to happen). Africa is set to embark into the new decade with hopes of development and prosperity. It will host its most spectacular global event in 2010:the FIFA world cup in South Africa. This will give an opportunity to Africa to showcase itself to the world. Still poverty and death manifested in terms of high incidence of HIV/AIDS will pose challenges to the region. A part of the African continent-Somalia would emerge as the worst country in the world. In fact, calling Somalia a country is a stretch . It has a President, Prime minister and Parliament , but with little influence outside a few strongholds in the capital ,Mogadishu. Instead , most of the country is controlled by two armed radical Islamist factions which regularly battle forces loyal to the government. The country gripped with extreme poverty and malnutrition is further shackled by the grips of one of its fastest growing industry-Piracy in the Gulf of Aden ,one of the world’s busiest shipping lanes. The future seems too bleak for the nation to be reversed in next ten years. Latin America under some of its big economies albeit Brazil, Argentina, Mexico is confident to emerge as strong catalyst for the world economy. Brazil, Latin America’s largest economy was one of the last countries to enter the global meltdown of 2007 and was also one of the first to come out of it. The country under President Luiz Infacio da Silva, steered forward on the international arena and is sure to emerge more powerful in the next ten years.
The nations of the world will in short face different destiny’s in the next decade encompassing the difficult teen years . Nevertheless, the common thread of problems in the globalised world would call for concerted efforts on the part of all. The next decade in the wake of further technological and economic development is sure to map loopholes in the form of further deteriorating Climate Change issues, international terrorism, Poverty and international inequality. These emergencies/exigencies would further knit the world economy closer into the cobweb of strong economic, social and political relationships.
Harshika Singh
MSc.Economic History
London School of Economics and Political Science,London
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