Population Growth Challenges

The population of the world continues to grow, as does the average standard of living, increasing demand for food, water, energy and waste disposal and placing increasing pressure on the environment. The population of the world doubled from 3.2 billion in 1962 to 6.4 billion in 2005 and is forecast to grow to 9.2 billion in 2050. Fertility rates are dropping in developed countries, while migration could lead to significant changes in population compositions. In most countries life expectancy is increasing, leading to larger populations of retirees who require pension and health benefits to last longer. Relentless productivity improvements are causing rising unemployment. All these are placing pressure on private and state social security systems. As a result, national budget deficits are likely to worsen and could lead to default as politicians fail to face up to proper funding of future liabilities for fear of electoral defeat or even social unrest.

The health care sector is also under pressure to provide more cost-effective solutions. With 80% of deaths from cancer, heart disease and other chronic diseases now taking place in low and middle income countries, demand for low cost medicines in developing countries is leading to conflicts with first world pharmaceutical companies determined to protect their intellectual property. While the world's workforce is growing apace, education systems are failing to provide enough skilled professionals, artisans and managers to meet demand, particularly for the mining, energy, construction and education sectors. Paradoxically, at the same time unemployment levels are rising, specially amongst the youth, as technology drives productivity gains. This situation is likely to worsen as an ever-shrinking proportion of the world's population is able to provide the goods and services required by all. The income gap between the wealthy, on the one hand, and, on the other, average workers and the unemployed poor, continues to grow, another potential source of social conflict. The lot of women, in servitude to ignorant men in many parts of the world, continues to look bleak.

Though food supplies have more than kept pace with rising population levels in the past, a combination of biofuels, rising standards of living and climate change, including floods and drought, are stressing agricultural production and leading to significant increases in food prices. With food already representing 10-20% of developed consumer spending but 65% of developing nation consumer spending, this impacts most on the world's poor. Applying modern agrobusiness methods in Africa and Asia will drive subsistence farmers off the land. According to the UNDP, 40% of the world's population will suffer water shortages by 2050. Scientists forecast that there could be no commercial fishing by 2048 as present levels of fishing would cause stocks to decline to less than 10% of maximum catches recorded.

Fuelled by demand from China, the mining industry has grown worldwide. Supplies of oil, gas, coal and uranium are forecast to peak as reserves are depleted, though technology to access shale gas and oil has deferred that peak. At the same time, fear of climate change is putting pressure on the energy sector to move away from carbon burning to solar and other environmentally friendly energy sources. The future of nuclear energy is uncertain after the Japanese disaster. The combined pressures of environmental regulation and higher energy costs will lead to the relocation of energy-intensive, polluting industries, such as smelting and pulp and paper production, to developing nations with fewer safeguards.

Experts, in the face of aggressive disinformation campaigns by sceptics, warn that world temperatures could rise significantly during the 21st century, leading to climate changes everywhere, unless governments, companies and individuals take corrective action soon, something not likely after the dismal Doha meeting in November 2012 even though recent research shows global warming accelerating. Australia, for instance, is experiencing record high temperatures yet persists in exporting coal and natural gas, while depending largely on coal fired power stations. There is disagreement between developed nations, with a history of pollution, and developing nations, industrialising to improve standards of living, on the appropriate action to take. The transport industry is the one most likely to be impacted by the combination of rising standards of living in the developing world, specially China and India; increased prices of hydrocarbon fuels; and efforts to mitigate global warming. There will be a move to more hydrocarbon-efficient vehicles. Transport infrastructure will have difficulty coping with forecast increases in traffic.

The global economy continues to grow with Asian countries leading the way with export led manufacturing and services industries. However, this growth is dependent on buoyant consumer markets in Europe and North America. While many countries of the world continue to report regular GDP growth, the growth itself is uneven within countries with the rich growing richer and the poor poorer. As the average standard of living in booming economies rises, so too does the number of poor people around the world, many of them moving from the countryside to unemployment in the city slums as part of a search for a better lifestyle. Globalisation now comprehends the movement not just of physical goods, but also services, finance, people, information and ideas. As a result the world is becoming ever more interlinked putting pressure on global, national and local governance systems designed in a previous era by those with power and influence at the time and, as fiscal, trade and environmental agreements are negotiated, even now. At one and the same time, we are seeing the move to larger, and even global, groups covered by the same regulations as well as to the creation of smaller entities with niche interests. Corruption and crime, particularly drug and human trafficking, have become huge international money spinners.

Economic power is shifting from the governments and companies of the USA and EU to those of the energy rich countries of the Middle East and Russia, low cost Asian manufacturers and service providers and South American agribusiness. Asia now has nearly 60% of the world's population, accounts for more than 35% of world output and 26% of world trade and has contributed more than 50% of post 2000 world economic growth. Asian average per capita incomes are now 25% of those of the USA and rising though 20% still live in poverty. Although reports give the impression of a large scale move in manufacturing capacity from the G7 countries to Eastern Europe and the Far East, where wages are lower, the reality is that the move has been much more gradual and less spectacular. Companies domiciled in developing nations are increasingly buying companies in the developed world.

Military power could well follow the shifts in economic power. Tensions could be exacerbated as groups with different beliefs and ideologies battle to control scarce resources. Traditional warfare between national armies is increasingly being replaced by terrorist groups representing dissident groups and prepared to conduct suicide missions against civilian targets; drones and other weaponry that is more powerful and can be more closely targeted; and cyber-sabotage. The spread of nuclear weaponry continues to be a major risk.

Technology provides the best hope for solutions to challenges ranging from cheap medicines to food production and from greater global democracy to converting the heat of the sun to other forms of energy. Technology continues to play an important role in communication, entertainment and improving productivity. The rise of the Internet has made people data rich and information poor while convergence is leading to the merging of computers, cell-phones, hi-fi, TV and other electronic devices, as well as the blending of cable, wireless and satellite communication. Smart-phones have become the cake and circuses to distract the modern unemployed. The rise of outsourcing services in countries such as India and the Philippines is underpinned by improvements in the global telecommunications infrastructure. In the financial sector, technology is also allowing stock exchanges of the developed and developing worlds to merge and provide sophisticated trading products. A shift is taking place from traditional money managers to sovereign wealth funds managing the proceeds from huge trade surpluses, hedge funds and private equity groups, all of which are less transparent and relatively unregulated. In time, technology improvements will also lead to knowledge management jobs being replaced by artificial intelligence. The gainers will be the deployers of capital provided consumer markets don't shrink.

And Africa? In the short to medium term, the continent will be prized as a source of minerals, energy (oil, gas, uranium, coal, solar) and arable land rather than for its people. The challenge for its leaders will be to avoid corruption while making best use of the rent to educate a growing population and provide an infrastructure so they can produce competitive goods and services, if only for local consumption, in a world of high energy prices. As with cell-phones, there will be opportunities to use new technologies to leap-frog countries with a vested interest in obsolete technology, though in the medium term technology could lead to the rape of African resources with minimal local manpower involved. For Africa's people, the biggest drawback will be, it's reliance on a limited range of commodities and the extractive industries. Those industries are dead-end activities that only provide diminishing returns over time (primary agriculture and extractive activities such as mining, logging, and fisheries). These sectors are not generating the employment opportunities that would allow the majority of the population to share in the benefits. This is in marked contrast to the Asian experience, where the growth of labor-intensive manufacturing has helped lift millions of people out of poverty.

That's a thumbnail sketch of today's world and some of the intertwined factors we need to consider. What will the world be like in 2020 or even 2050? We don't know. All we can do is scan the mass of data coming our way and try to identify the signposts which might only hint at where we are all headed.