Laurence Smith - The World in 2050 - Four Forces Shaping Civilization's Northern Future

While all is not lost in Nigeria—it completed its first transfer of power between civilian governments peacefully in 2007, and Lagos crime rates fell sharply in 2009—it remains a dangerous place to live. Despite growing Nigeria’s gross domestic product to the second largest on the African continent, Lagos is a slum city and—like other slum cities in Africa, Asia, and Latin America—is a stark illustration of an urban world we don’t want. Clearly, there is far more to building shining technopolises than urbanization and economic growth.

Sub-Saharan Africa is a collection of countries bursting with natural and agricultural resources. Many have functioning or semifunctioning democracies. Yet, colonialism, nonsensical borders, tribal loyalties, HIV, and other problems have bogged it in muddy poverty. Nearly two-thirds of its towns and cities are slums. Recall that at current growth trajectories, these urban populations will triple in the next forty years. The still-unfolding results of the Lagos experiment do not bode well for this new African urbanism. Under the conservative ground rules of our thought experiment, it’s hard to envision how so many problems can be eliminated overnight. By 2050 I imagine much of sub-Saharan Africa—the cradle of our species—to be a dilapidated, crowded, and dangerous place.

Not only is the geography of the world’s urban population shifting, so also is its wealth. The economic impact of nearly two billion new urban consumers in Asia has not gone unexamined by economists. Unlike the situation in Africa, there is every indication that the rising Asian cities will be modern, globalized, and prosperous. In a thoughtful, forward-looking assessment the U.S. National Intelligence Council writes: 65

The international system—as constructed following the Second World War—will be almost unrecognizable by 2025. . . . The transformation is being fueled by a globalizing economy, marked by an historic shift of relative wealth and economic power from West to East, and by the increasing weight of new players—especially China and India.

China and India—along with Brazil and Russia—are considered such economic giants-in-waiting that they’ve won their own acronym, the “BRICs” (from the first letters of B razil, R ussia, I ndia, and C hina), first coined in 2003 by the global financial services company Goldman Sachs. 66According to econometric model projections by Goldman Sachs, PricewaterhouseCoopers, the Japan Center for Economic Research, the International Monetary Fund, and others, the BRICs are on pace to displace current economic leaders faster than you might think, thus redrawing the map of global economic power over the next forty years. 67

The world’s three biggest economies today are the United States, Japan, and Germany. But by 2050 most model projections have China and India leaving all other countries save the United States in the dust. The Goldman Sachs model, for example, projects U.S. gross domestic product to rise from USD $10.1 to $35.1 trillion, Japan’s from $4.4 to $6.7 trillion, and Germany’s from $1.9 to $3.6 trillion by then. In contrast, India’s GDP is projected to rise from $0.5 to $27.8 trillion and China’s from $1.4 to a whopping $44.4 trillion. Brazil and Russia are projected to rise from $0.5 to $6.1 trillion and $0.4 to $5.9 trillion GDP, respectively. 68China would thus overtake the United States as the world’s largest economy and India would become the third largest.

The 2008-09 global financial crisis only reaffirmed this picture. While the economies of America, Japan, and Germany were shrinking, the economies of Brazil, India, and China grew 2%, 6%, and 9% annually, respectively. 69By late 2009 Brazil, one of the last countries in and first out of the downturn, was again growing 5% per year and was on pace to become the world’s fifth-largest economy even sooner than Goldman Sachs envisioned, overtaking Britain and France sometime after 2014. 70New post-crisis modeling by the Carnegie Endowment for International Peace reaffirmed that China’s GDP would indeed surpass that of the United States, probably by 2032. By 2050 the world’s three largest economies would still be China ($45.6 trillion), the United States ($38.6 trillion), and India ($17.8 trillion) . 71

While such growth rates sound dramatic, they are actually less spectacular than those enjoyed by Japan for three decades between 1955 and 1985. If these economic model projections hold—and in accordance with our “The Models Are Good Enough” ground rule let’s assume here that they will—the world will move from having not one huge economy but three. Of the original top three, only the United States will remain, in distant second place behind China. The relative clout of deposed Japan, Germany, and others of the original G6 (France, Italy, and the United Kingdom) on the world stage will be diminished.

So if China and India are poised to dethrone the original G6 economies, what does that mean for you? Will Chinese and Indians soon enjoy more lavish lifestyles than Germans and Italians? Will Parisians emigrate to São Paulo, seeking better pay and a happier future for their children?

Almost certainly not. Recall that one of the big drivers of all this economic growth is rising urban population and modernization. The economies of China and India must grow to support that. If they didn’t, per capita incomes would decrease. The cost of living would have to go down, not up. That’s not how things work. Can you imagine all those rural migrants pouring into New York City in the early 1900s driving the price of food and housing down ?

No. Asia’s rising cities demand that the economies of China and India grow many times over, and this will also multiply per capita incomes in these countries. However, that progress in personal wealth will still be relative to the extremely low per capita incomes of today (averaging less than $3,000 per year for both countries in 2010). With the sole exception of Russia, 72personal incomes in BRIC countries are not expected to surpass those of France, Germany, Italy, Japan, the United Kingdom, or the United States by 2050. An average Indian today makes less than one-thirtieth the income of an average Brit. In 2050 she or he will make less than one-third . 73That’s a tenfold improvement, to be sure, but still a yawning divide. The Goldman Sachs model, for example, projects that the average Chinese worker will earn around USD $31,000 per year in 2050. That is much better than in 2010 ($2,200 per year) but still substantially below the projected 2050 per capita incomes for Italy ($41,000), Germany ($49,000), France ($52,000), the United Kingdom ($59,000), Japan ($67,000), and the United States ($83,000).

At the national geopolitical level, however, new superpowers mean complicated, shifting alliances. Having more superpowers portends intense strategic rivalries for trade, foreign investment, and natural resources. It means having more powerful political leaders in the world, and history tells us that their ideas matter. The choices made by Vladimir Lenin, Joseph Stalin, Adolf Hitler, Mao Zedong, Winston Churchill, Franklin D. Roosevelt, Harry Truman, and George W. Bush will reverberate for years. Running through everything are the fault zones of historical, cultural, and religious divisions. “Bad outcomes are not inevitable,” the National Intelligence Council assessment concludes, but “today’s trends appear to be heading toward a potentially more fragmented and conflicted world.” 74

The choices of future political leaders cannot possibly be divined here. But what we can foresee is an assortment of growing demographic, economic, and resource pressures that will shape the context and options available to them. We are barreling toward a world with nearly 40% more people and a doubled food requirement by 2050. We are transforming from a poor rural to wealthier urban species. We are in the midst of a historic transfer of money and power from West to East. The bad news, as we saw in Lagos, is that some parts of our world are poorly equipped to deal with these changes. The good news is that in our rush to urbanize, we may have found the golden pliers for defusing Ehrlich’s population bomb.