Second Group Work Topic: Tendency of economy for 2030 and its influences in

education, society and employment.

1. Introduction

Producing a reference scenario for economy in 2030 is not an easy task. It is

indeed a complex exercise where studies identify and analyze the global trends
in five main drivers of economy growth taking into account the possible “game-
changers” that could reverse, interrupt o disrupt these trends and outcomes.
According to the 2015 European Strategy and Policy Analysis System (ESPAS)
Global Trends Report the five main global trends and drivers to economy growth
are:
1. A richer and older human race,
2. A more vulnerable process of globalization, with an uncertain leadership,
3. A transformative industrial and technological revolution,
4. A growing nexus of climate change, energy and competition for resources,
5. Changing power, interdependence and fragile multilateralism.
In the next topics, these global trends will be discussed in the light of the
mentioned report from 2015 and the 2018 European Parliamentary Research
Service (EPRS) Global Trends to 2035 report.

2. Optimistic and Pessimistic Views

2.1. Global trend 1 - A richer and older human race

In the 2015 ESPAS report, this global trend projects a richer and older human
race characterized by an expanding global middle class and greater inequalities.
In the mentioned report, the studies in population projections suggest that the
global population growth will continue in a moderate pace, and, around 2035, the
global population might already stop increasing. However, accordingly to the
2018 EPRS report, more recent forecasts don’t indicate that the population will
stop growing, in fact, the latest available UN projections predicts global
population will rise to over 8.7 billion by 2035, and to continue to grow after that
point at somewhat less than 1% per annum, with no peak until the end of the
century.
Nevertheless, global demographics will continue to alter under the impact of
increasing life-expectancy, declining fertility and rising levels of education.
Changing demographics will have a profound impact on geopolitical and
economic trends worldwide. Widespread ageing will probably have major
repercussions on the labor force, personal savings and global productivity.
The impact of this ageing in the economy will be established also by the education
levels of the population, since that people who has a university education will
work longer, have more savings and be more productive. Which means that
emerging countries with deficient education and decreasing birth rates will face
an even more difficult challenge.
Finally, projections indicate that the global economy’s middle class is expected
grow between 2009 and 2030, from 1.8 billion to almost 5.0 billion. It is thus
expected to account for about 60 % of the world population. The middle class is
indeed expanding in emerging economies, as a large share of people gets out of
Poverty, however, this doesn’t imply that inequality is falling in these countries.

2.2. Global trend 2 - A more vulnerable process of globalization

The shift in the center of gravity of the world economy towards Asia will continue
to 2030 and beyond. Emerging countries will continue to grow, even if at a slower
pace, as a result of markets opening, particularly South-South, i.e. trade between
emerging economies, improvement of the workforce and a high level of savings
due to the population ageing. The diffusion of new technologies in these
economies and societies will also play a positive role.
By 2030, Asia will have surpassed North America and Europe combined in terms
of global power, based upon GDP, population size, military spending, and
technological investment. Despite this change of economic balance, the global
economy will still be dominated by three continental economies (United States,
Europe and China), however their position relative to one another will change:
China’s gross domestic product is expected to overtake both the European Union
and the United States. The European Union would drop to second place and the
United States to third. Due to this shift, the health of the global economy
increasingly will be linked to how well the developing world does.
2.3. Global trend 3 - A transformative industrial and technological revolution

Technology has a great part in global development. However, predicting where

digital technologies will have led us by 2030 is an intimidating task, since it has
changed so much through the past years. The pace of technological progress
has accelerated, and several sectors have gone digital, often with disruption of
existing business models replaced by data-driven multi-sided platforms.
Nevertheless, the current decade has witnessed very important trends. These
are a starting point for imagining the world in 2030. That being said, we can
highlight that in hardware, current trends include virtualization of functions,
massive cost reductions, and the transition from central processing units (CPUs)
to more efficient and powerful graphics processing units (GPUs) and ultimately
tensor processing units (TPUs), designed as AI accelerators. However, the real
discontinuity arrives in a few years, with quantum computing taking the stage and
becoming commercially viable. This means an impressive acceleration in the
ability of computers to solve complex problems, from logistical and optimization
problems to weather and climate modelling, personalized medicine, space
exploration, real time language translation and, most generally, encryption.
On top of the hardware layer, a whole new stack is emerging, based on the
combination of blockchain, artificial intelligence and the Internet of Things. In its
essence, blockchain technology consists in a time-stamped series of immutable
record of data that is managed by cluster of computers not owned by any single
entity. Each of these blocks of data (i.e. block) are secured and bound to each
other using cryptographic principles (i.e. chain). Blockchain is expected to
gradually replace current infrastructures in a number of domains: tax reporting,
e-identity databases, voting schemes, may run on blockchain or another form of
Distributed Ledger Technology. Blockchains provide two characteristics that
make them attractive as a transaction recording solution: (i) Cryptographic
immutability and verifiability, which makes it quite impossible to modify
transaction records once committed, thus ensuring secure transactions; and (ii)
distributed consensus allowing anonymous individuals across a peer-to-peer
network to come to agreement on the state of the network, thus removing the
need of a centralized agreement mediator/organization. Artificial Intelligence will
make important inroads towards simulating and complementing human
intelligence, predictions says that artificial intelligence will certainly be able to
perform the vast majority of tasks that human beings perform today. The Internet
of Things is the most mature of the technologies composing the ‘new stack’, with
close to 30 billion devices already expected to be connected to the Internet by
2020. To give a sense of the acceleration of the connection of devices of all sorts
into one single, dense information space, it suffices to note that according to one
recent forecast, there will be 125 billion devices connected in 2030 (IHS Markit);
and ARM, a big semiconductor firm recently acquired by Softbank, predicted that
there will be one trillion connected devices in 2035. The real hubs of these
interconnected devices, according to predictions, will be the human body: this will
transform the Internet of Things into what some authors have called the ‘Internet
of me’.
This growth and diffusion will present significant challenges for governments and
societies, which must find ways to capture the benefits of new IT technologies
while dealing with the new threats that those technologies present.

2.4. Global trend 4 - A growing nexus of climate change, energy and competition
for resources

The global competition for access to natural resources will continue to intensify,
as well as the associated risks like market volatility, geo-political tensions and
instability. This is a result of the large-scale exploitation and extraction of natural
resources be highly concentrated in a small number of producer countries.
In 2030, managing scarcity will be the principal challenge for food and water
supply. According to FAO, 2012, the demand for food is expected to be 50%
higher than in 2008. This rise is mainly due to the improving living standards of
the fast-growing middle class in the major emerging economies. The availability
of agricultural land will pose another major challenge, as will some agricultural
inputs, in particular those based on potassium.
Without corrective policies in the next 20 years, drastic and irreversible changes
are expected in global eco-systems affecting the climate, biosphere, continents
and oceans. The World Bank estimates that by 2025 climate change will be
responsible for shortfalls in food harvests or water that will affect 1.4 billion
people. Shortages could seriously threaten South-East Europe, South America,
Africa and Asia. Unless some significant technological break-through occurs,
water shortages will have a major impact on agriculture: in some countries, such
as China, 90 % of water consumption is for food production. In 2030, between
1.9 and 2.6 billion people are likely to suffer from a lack of water.
Predictions says that by 2030, 93 % of the rise in energy consumption will be in
non-OECD countries. The effects of the present rising energy consumption will
be lasting and even become a major problem in the more distant future. The
increase in global consumption will be linked mainly to population growth and
rising incomes. Energy savings and the development of renewables will not be
enough to limit the growth of CO2 emissions by 2030. Progress in energy
efficiency, CO2 storage and demand management will probably not suffice to
solve the problem. Competition for energy resources will continue, with
substantial shifts in consumption.

2.5. Global trend 5 - Changing power, interdependence and fragile multilateralism

The world enters an age of insecurity, more interdependent, but also more
fragmented, insecure and polarized. Surprisingly enough, globalization is
challenged by a worrying and developing trend towards exclusion. The tendency
of globalization to shut out some countries (such as Congo), and even some large
regions (such as the Sahel), is a major threat and a source of weakness for the
international system. This process also strongly affects the poorest sections of
the population even in developed and emerging countries that are well integrated
into globalization. In addition, it can threaten territories and eco-systems by the
destruction of natural resources, such as forests, and of biodiversity. These
exclusions seem to increase in scale, in the process they alienate those directly
hit in developing countries as well as citizens in developed countries, leading to
reactions such as the ‘Occupy’ or ‘indignant’ movements, which could become
stronger in any future crisis.
Key international relationships are likely to change, with the United States still
dominant but challenged by the rise of China and other emerging powers. The
increase in military spending by emerging countries contrasts with the declining
defense budgets of most developed countries between 2004 and 2013. From
now to 2030, this trend will probably continue: increases in defense spending will
be seen in Asia, Russia, the Middle East, North Africa and Latin America, but not
in European countries, North America and Oceania. Projections differ: some
studies predict that military spending in China will overtake the United States as
early as 2023. Even so, the United States will still be the world’s top military power
in 2030.
Multilateralism is weakening. Its tasks will be shared between multilateral
organizations, regional alliances and other restricted structures. The new power
and economic success of emerging countries will impact the dynamic of the
multilateral system, their increased economic role will translate into an increased
assertiveness. Cooperation with them may become more difficult as they may
challenge existing global norms. Territorial disputes are likely to exacerbate
tensions. Some of these countries will be inclined to adopt strategies based on a
narrow view of their national interests. This may impact bilateral and regional
relations. Strategies of single or groups of emerging countries, may include
blocking collective decisions in order to extend their influence or safeguard their
interests.
Convergence around values such as fundamental human rights, democracy and
the social market economy may stall. More recently, globalization has started to
radically transform economies and people’s everyday lives. There is little doubt
that it has promoted the spread of resilient free-market economies and liberal
regimes. However, far from making the world a uniform place, its impact is
ambivalent, speeding up the movement of ideas, people and goods, but also
prompting a return to local values and allegiances. Economic globalization and
the growth of the middle classes spawned theories about a convergence of
values that might transcend national and regional borders. This possibility must
be treated with caution, as there are many examples of persisting and entrenched
divisions and resistance to what many perceive a drive towards uniformity. There
is no convergence of values, for instance, on the issue of gender in many parts
of the world and there seems little prospect of immediate progress.
Analysts agree that globalization is moving towards a more polycentric and
segmented system, more interconnected economically, financially and
technologically. Globalization will continue to increase interdependence between
states and between public and private sectors. As well as stressing how
unpredictable and volatile the world is, the same analysts draw attention to
stronger tendencies to pursue national interests and the fragmentation of
decision-making.
In this climate of uncertainty, volatility and systemic risk, the scope for negative
game-changers is considerable. Possibilities include a massive financial and
monetary crisis, a major pandemic, a large-scale energy crisis, a conflict in the
Asia-Pacific region. Positive game-changers are also possible, sometimes in
response to such risks — such as a truly inclusive digital revolution, a major
energy revolution, a transformed transatlantic relationship, a reinvented
multilateral system and a renewed European Union.

3. Impacts in Education, Society and Employment

References

ESPAS (2015) - Global Trends to 2030: Can the EU meet the challenges ahead?
EPRS (2018) - Global Trends to 2035 - Economy and Society.