Where will the world be by mid-century?

There has been much dialogue and debate over this seemingly hypothetical but extremely relevant question by economists, analysts, opinion makers, watchdogs, governments, experts, researchers, professionals, students and even citizens.

Crystal ball gazers may have their own predictions — with the underlying consensus being that mega trends are reshaping the world such that it will look significantly different come 2050. It is also true that for some, it is a subject of contention, and for others, a window to a world of opportunities and new challenges that tomorrow will bring.

According to the United Nations, the global population will grow to 9.6 billion and by 2050, people aged 60 and older will more than double to two billion. Fertility rates will drop further and age-related illnesses will be on the rise. Resource scarcity will be a major risk, especially its impact on food and energy supply.

Further leaps in technology and computing at lower cost will mean robots and artificial intelligence will become pervasive and will redefine how we live, work and engage. Global economic growth will no longer be a narrative of a “pole” economic model or that of developed versus emerging markets, but instead reflect a multi-polar world. The world will change faster and more radically than we can possibly imagine.

What will be the next wave of globalisation?

A study of globalisation by The Boston Consulting Group, spanning the late 1800s to now, shows that there are phases of growth and periods of transition, usually triggered by a crisis event. Although each phase differs from the previous one, all follow the same model, which comprises three forces.

First, a new “technology” is leveraged by a country or set of countries to boost productivity and output. The steam engine, mass manufacturing, the internet and outsourcing are such “technologies” (referred to in the broadest sense) that featured prominently across the different phases of globalisation.

Second, one or more countries will serve as an economic “pole” and become the global growth engine. Western European countries, the US and China played this role in the first, second and third phases of globalisation respectively, driving 20% to 25% of world GDP growth and about 15% of global trade growth. This in turn, fuelled economic activity in other countries, especially the trading partners of the “poles”.

Third, a favourable system of global governance facilitates cross-border financial flows and trade through the enforcement of stable “rules of the game”.

Together, these three forces fostered a virtuous cycle of economic growth and greater integration, ensuring that global economics took precedence over local politics.

However, this model of globalisation is unlikely to be repeated. Evolving technologies are expected to result in fundamentally different adoption patterns from those seen in previous waves. And digital technologies are no longer dominated by a few countries. This means, unlike before, that we will no longer see select countries emerging as the world’s economic “pole”.

Governance structures will undergo transformative changes, necessitating compliance with multiple, sometimes conflicting, global rules. There is also growing protectionism across many countries.

In this new phase of globalisation, countries will have varied growth trajectories. China, India and Indonesia, for instance, will become more focused on boosting domestic demand. Government policies will potentially be targeted at stimulating the services sector to include healthcare, education and tourism, while finding ways to take full advantage of new technologies.

Is Malaysia ready?

Malaysia will need to dramatically rethink its approach to long-term growth in the face of the next wave of globalisation. Our base of domestic demand will remain relatively small. And while we are growing our domestic services sector, the era of low-cost manufacturing for exports is at its tail-end. Where will the opportunities lie for Malaysia?

There have been many discussions on the adoption of Industry 4.0 within our manufacturing sector to change its growth trajectory, prevent premature deindustrialisation and boost overall productivity and competitiveness. Related to this is the increasing adoption of digital technologies and related services that may fuel what is often referred to as a digital economy. Even in more traditional sectors like agribusiness or plantations, we can leverage the internet of things and the usage of big data to fundamentally transform operations.

Over the years, Malaysia has also been investing heavily in an ecosystem for start-ups. While we may not be at the forefront yet, access to digital technologies opens up unimaginable opportunities for our entrepreneurs to create disruptive products, services and new markets, or to adopt proven business models and bring them to this part of the world. Can we harness all of these today to shape the future for Malaysia?

While we work to resolve the immediate challenges and issues that Malaysia is facing today, at the same time, we cannot lose sight of the future we need to shape for the generations to come. We have to believe that this future is not predefined by mega trends or by the actions of larger nations, but rather how our collective actions today will take us to where we want to be come 2050.

Globalisation and economic growth are examples of how considerations about the future can be framed. There are numerous other perspectives we can look at to define our future, including our environment, social construct, values, workforce, governance model and so on.

What is critical is to start the conversation today. The massive forces of change coming our way will be disruptive but they can also be a blessing. We can only get to a better place if we start asking and debating the question, “Where will Malaysia be in 2050?”, and from there, define what we need to do differently to unleash our true potential.

The government’s efforts with TN50 to raise awareness and the need to engage with the youth on aspirations for 2050 are commendable. Malaysians should certainly take this opportunity and the platform presented to have their voices heard.

We should not stand on the sidelines. We owe it to our future generations, to our children and to our grandchildren, so that when they ask us in 2050 about our contribution to a better Malaysia, we will not come up short.

Nor Azah Razali is a partner and managing director at Boston Consulting Group

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