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GeoFusion

GeoEconomics: Global Trends in the 21st Century

The second decade of the 21st century was marked by a high growth for the Indian economy. India’s real GDP growth was at its peak in March, 2010, when it reached 13.3%. The nominal GDP growth at that point was over 16.1%. The bad news was that in September 2019, this number was at 6.3%, its lowest in the decade. This decrease could be attributed to the sliding share of the industrial output. What is strange here is that this is only typical for post-industrial economies while India is yet to be fully industrialized. However, the Indian government has already set the ball rolling by announcing one of the largest and ambitious infrastructure projects earlier this year. It is also undertaking many projects planned earlier and reviving a few stalled ones. If the planning is successful, India may renew its ascendance. 

Global Entrepreneurship

The first chart in this section shows cross-border Merger & Acquisition activity, which is a tactic used to rapidly expand to new markets on a global scale. During 2018, the United States was the leading acquiring country for cross-border M&A activity with over 4.7 thousand deals, accounting for almost 50% of the total cross-border deals made during 2018. The United Kingdom (UK) and France were the next largest acquiring nations with 775 and 448 deals respectively.

On the opposite side, the following graph shows the Foreign Direct Investment (FDI) outpourings which is an interest as a controlling proprietorship in an organization in one nation, legitimately situated in another. 

The hint of the speculation doesn't impact the definition: the venture might be made either "inorganically" by purchasing an organization in the objective nation or "naturally" by growing the activities of the current business in that state.

The chart shows that the first two places belong to Asian countries. The difference between the two charts is that by definition, Foreign Direct Investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans. So, therefore, M&A activities are only a specific part of FDI  (only special types of contracts), while all Foreign Direct Investments have many more aspects.

GDP per capita growth

 

Asia was the continent that recovered the fastest since the global financial crisis from 2007-2008. The average growth rate of the Asian economies exceeded 6% in 2010 (which was more than double that of their Western counterparts). 

 

According to the data for 2019, Oriental countries are still leading the world in terms of economic development with a growth rate of more than 3%. Although, it seems that Eastern ascendence has slowed down for the moment, it is only because of the maturing of the Chinese economy while the other big players like India and Indonesia are still catching up and will surely raise that number.

GDP per capita

 

Even though Asia lags behind the West in terms of GDP per capita, its huge growth rate is about to change that. There are comparatively fewer countries in Asia compared to the West that could be considered developed (according to the United Nations) and those are the four Asian Tigers plus the industrial giant of Japan.

The gap between the richest and poorest countries in Asia is staggering. The continent holds the state with one of the highest GDPs per capita in the world - Qatar and also one of the world’s poorest and most closed societies - North Korea.

 

That shows that Asia is the land of  extremes, but unlike Africa it possesses many of the most technologically progressive countries like South Korea, Japan and Taiwan. More so, the dazzling growth of the Chinese economy is set to transform global politics in the 21st century.

trends_and_technology_timeline_2010.jpg

Humanity will become stronger and stronger, however, at the same time it will gradually age: due to technology, more and more diseases will be successfully cured, and more and more will be spent on healthcare, medicines and medical tourism. Everyone will be connected ever more closely to everyone else. Information and communication technology, cheap travel and migration will change people’s behavior, work and mindset. In 50 years, everyone will be accessible to each other worldwide. Meanwhile, localization gains momentum, tribal feelings are developed in the new citystates, local trumps global. We will experience the “rise” of the machines, and out of the fusion of Genetics, Robotics, the Internet and Nanotechnology, the GRIN technology will be born. The shift of power from the West to the East is a huge shaping force: China and India will be the winners of the coming decades, and Russia, Brazil and Mexico will increase their clout.

Key points:

The unipolar world will once again develop into a multipolar one, and a new world order will arise in the 21st century. This phenomenon can be attributed to several readily observable reasons:

- Aging and migration have various economic and social implications in both developing and developed countries

- In the global world based on new technologies, the door is open to everyone. The knowledge flow between developed and rapidly developing economies is a dual process: it forges connections (new alliances, catalysts), and at the same time the employer country increasingly becomes a mere provider of knowledge rather than its producer

- Global strategies are replaced by “regional” cooperations. Among the numerous alliances of the multipolar world, smaller countries may often be able to tip the scales

- If the paramount conditions for successful economic growth will be a highly skilled labor force, balancing between regional cooperations and resilience to crises, peripheral countries with a flexible and knowledge-intensive economy might act as the new points of reference in the world economy

- After the crisis, new value systems will develop, in which maximizing short-term profits will be of secondary importance behind long-term value creation and preservation. In parallel with the transformation of responsibilities, new industries will reshape the markets.

Therefore every country’s long-term strategy should include a vision that puts its own local strengths in the service of sustained economic growth, employment and improving living standards in the global geopolitical and geo-economic competition.