Editor's note: "Tomorrow and tomorrow and tomorrow" is a three-part series on the future of the global economy in 2025. Read part 1: Tomorrow and tomorrow and tomorrow: The global economy’s path to 2025; Read part 3: Resource limits and slow-moving institutions may hamper economic growth
Six reasons to see the global economy in 2025 as a glass half full.
1. Ignore last year’s bad news:
Despite the talk of the disappearing middle class and the economic malaise all around the globe during the 2012 US presidential election, by 2025, most of the world’s population will be in the “middle class” — defined as having disposable income of at least $10 a day. Who are we to argue with the collective wisdom of the US National Intelligence Council and McKinsey?
2. Talkin’ ‘bout a revolution:
Do the math. With a population of about 10 million at the outset of the industrial revolution, GDP per capita in Great Britain doubled over 150 years. China and India alone, with populations of about a billion apiece, will experience roughly 10 times the economic acceleration. The US will get 1000 times the economic growth that followed the first Industrial Revolution. Another industrial revolution, far more revolutionary than any preceding it, is – and will be – underway.
3. The fortunate at the bottom of the pyramid:
The vision is more than just that of the middle class and the usual emerging market darlings. For the BRIC countries (Brazil, Russia, India and China), the progressive future is a globally inclusive one. Even Africa, the so-called "final frontier" of the global economy, is within sight.
According to the IMF’s World Economic Outlook, 12 out of the 20 fastest growing economies in the world will be in Africa.
Rates of ownership in consumer durables, housing quality, and health and education, suggest that consumption in sub-Saharan Africa has been growing more than three times faster than what GDP measures suggest, according to Alwyn Young of the London School of Economics.
Moreover, the emerging market darlings need Africa as a trading partner and for its resources. China, India, Brazil are leading the South-South moves on Africa. If it is Africa’s turn, then everybody else will have already had their moment and will be turning to Africa to keep their place in line.
4. Convergence of game changers ahead:
Innovators are optimists and will continue to push the envelope. Social media, mobile applications and cloud computing are the most significant high-tech disruptions, but many other transformations are in the works. More climate-friendly gas will replace coal and several renewable energy technologies will reach critical mass as well. Robots, nanotubes and gene sequencing will transform work and life, the materials we use and the state of human health. If you are a devotee of Ray Kurzweil, the entrepreneur, you will believe that by 2029, we will have passed the Turing test: a machine can replace a human for any job.
5. US competitiveness sustains:
The US will continue its dominance of the global economy due to many factors: a bonanza in domestically produced natural gas and eventual energy independence, a revival in manufacturing, demographic advantages through the influx of immigrants, the benefits of its commitment to freedom of speech and creative expression, its exceptional culture and history, and its access to two oceans and the most powerful military force in the world.
While China’s ascendance is inevitable, it will offer a good counter-balance — primarily as an economic power. This will serve a key purpose of keeping the US on its toes.
6. Democratic Capitalism spreads:
Thanks to the ubiquity of technology, in conjunction with greater empowerment and engagement of ordinary people and their ability to voice their ideas, there will be more bottom-up co-creation and user-led customization of business and the political context. Daron Acemoglu of MIT and James Robinson of Harvard argue that “inclusive” government will prevail as the winning formula for sustained progress. Even within undemocratic systems, dismantling of state controls is inevitable.
In addition to these six factors that will drive the economy in 2025, consider these other clear signs: China is steadily but surely heading in that direction. Add that to the Arab Spring, developments in Myanmar, movement towards progressive governance in many parts of sub-Saharan Africa, and grassroots level change in India to modify democratic, but corrupt, systems.
Read part one in this series: Tomorrow and tomorrow and tomorrow: The global economy’s path to 2025
Read part three in this series: Resource limits and slow-moving institutions may hamper economic growth
Bhaskar Chakravorti is the senior associate dean of International Business & Finance at The Fletcher School at Tufts University. He is founding executive director of Fletcher’s Institute for Business in the Global Context. He has taught innovation and entrepreneurship at Harvard Business School and Fletcher and was a leader of McKinsey’s Innovation and Global Forces practices as a partner based out of the Boston office. He is the author of the book, "The Slow Pace of Fast Change." The Institute recently started its Fletcher Futures project: http://fletcher.tufts.edu/IBGC/fletcherfutures.