Global Challenges 2013


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Global Challenges in International Political Analysis 2013

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Global Challenges 2013

  1. 1. International Political AnalysisGlobal Challenges andTurning
  2. 2. BioThe authorOlga Gil, Ph.D@olgag
  3. 3. • Global Economic Trends• Emerging Market Multinationals• Dictatorship, Democracy, failed States• New Demography: aging, migration, obesity• Inequality and Poverty• Sustainability• Global Powers• Uncertainty and Complexity•Life expectancy@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  4. 4. Turning points“veritable game changers, inflexionsthat transform human societies”Mauro Guillén and Emilio OntiverosA new set of constrains and opportunitiesThe rise of emerging economies, population aging, urbanization,governmental gridlock and breakdown of state authority,deepening inequalities, environmental degradation and thereconfiguration of global power relationships@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  5. 5. Global Economy out of Balance@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  6. 6. Global Economy out of Balance• Most large economies -except Germany and Japan- arerunning trade deficits• Most emerging economies are running trade surpluses• Emerging economies own 2/3 of foreign exchangereserves and accumulate two billion dollars each day• After two decades of intense economic growth,emerging economies represent half of global economicactivity• Emerging economies are providing the financing for thelarge current account deficits in the high-incomecountries@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  7. 7. Emerging market multinationalsexpanding like wildfire@Olga Golgagil@olgagil.esGlobalChalleges&TurningPointsPhoto: Callison Global en Flickr:
  8. 8. Emerging market multinationalsexpanding like wildfireIn 2010 they represent• 25 per cent of the largest 500 companies in theworld• 29 per cent of the number of multinationalfirms• 41 per cent of new foreign direct investmentflows over the previous five years@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  9. 9. Demographic conditions change fast@Olga Golgagil@olgagil.esGlobalChalleges&TurningPointsPhoto:
  10. 10. Demographic conditions change fast• Japan and several Western countries haveinverted age pyramids with more people over 60than below 20• More people live in cities than in the countryside• Greater numbers suffer from obesity (1 Bn) thanfrom hunger (800 million)@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  11. 11. Uncertain political landscape@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  12. 12. Uncertain political landscape• Chaos and anarchy in many parts of the world• From the first time since World War II morecountries are affected from state failure thanruled by dictators (nearly 50 countries including Chad, Congo, India,Iraq, Mexico...)• General decline in capacity and legitimacy of thestate@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  13. 13. Economic disparity• Income inequality across countries hasdecreased since 2000 due to the rise of emergingeconomies• But inequality within countries increases,posing problems to developed and developingcountries alike• Growing lack of competitiveness of rich-countryfirms relative to emerging market multinationals@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  14. 14. Quest for Sustainability• Growth in emerging economies hand in handwith environmental degradation• Energy, green production, consumption of goodsand services are targets• Technology and behavioral change as solutions?• Water and food scarcity@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  15. 15. The ChallengeThe world needs new approaches to globalgovernance to deal with complexity, uncertaintyand the interconnecteness of the global economy@Olga Golgagil@olgagil.esGlobalChalleges&TurningPoints
  16. 16. XXI CenturyDifferent kind of globalizationEmerging economies and many poor countriesare increasingly participants in a moreintercomented global economic systemWorldTurningPointsTechnologyAfrica16 million people with mobiles by 2000500 million and 70% of the population by 2010LATAM has reached levels of mobile phone usecompared to Europe
  17. 17. XXI CenturyDifferent kind of globalizationEmerging economies and many poor countriesparticipants in a more interconnected globaleconomic systemThe rise of the BRICKs and the MINTsBRICKsBrazil, Russia, India, ChinaMINTsMexico, Indonesia, Nigeria, Turkey, South AfricaDuring the first decade of the XXI century emerging economies grewat an average annual rate of 8-9 per cent compared to 2-3 per centfor most developed economiesWorldTurningPoints
  18. 18. XXI CenturyThe rise of the BRICKs and the MINTsGDP share OCDE countries versus non OCDE (1990-2030)WorldTurningPoints
  19. 19. XXI CenturyThe most complex crisis in history?Putting public finances to the testThe global financial crisis starting in 2007 as aconsecuence “of the global economy” –complexweb of linkages between economic and financial activity(Guillén and Suarez 2010)The financial debacle: The 2008 perfect stormSize of global integration of finantial operatorsRisk management practicesFailures of finantial regulatorsDubioud workings of rating agenciesThe original liquidity crisis mutated into a general crisis of confidenceaffecting bank lending, corporate investment, and job creationWorldTurningPoints
  20. 20. XXI Century CrisisChallenging assumptions underpining growthFrom the Second World War:• The role of fiscal and monetary policy• The welfare state• International monetary cooperation• Shook assumptions about how actors makeeconomic decisions: “animal spirits” (Akerlof &Schiller 2010)WorldTurningPoints
  21. 21. XXI CenturyGDP Decline in OCDE countriesAll OCDE countries suffered from at least two quarters of economicdecline. The crisis affects rich countries, deeply in debt andfearing for the stability of their currencies.WorldTurningPoints
  22. 22. XXI Century CrisisParticularly severe: The Crisis in EuropePutting at risks the accomplishments ofEuropean integration:• The monetary union created in 1999• Indicators of public finances in Europe are noworse than for the US or Japan• However, soaring risk premiums for Euro Bondsmeans that investors does not like the lack offiscal unionThe original liquidity crisis mutated into a general crisis of confidenceaffecting bank lending, corporate investment, and job creationWorldTurningPoints
  23. 23. XXI Century CrisisResilience of emerging economiesDespite the suffering of sharp and temporarydecline in commodity prices…• Low levels of external debt• Accumulation of foreign reserves:China 3.2 trillion dollarsSaudi Arabia 517 billionRussia 473 billionBrazil 348 billionIndia 280 billionEmerging economies become part of the solution to the crisis providingcapital to rich economies: the relatively poor funding the richWorldTurningPoints
  24. 24. XXI Century CrisisEmerging economies: The relatively poor funding the rich, and increasing their influence andbargaining power – as they see their share of global production to increase.WorldTurningPoints
  25. 25. XXI Century CrisisResilience of emerged economiesPublic debt figures in advanced and emerging economiesWorldTurningPoints
  26. 26. XXI Century CrisisFears• FDI and Mergers and adquisitions bymultinationals declining sharply• Global protecionism: tariffs or currency wars, andone of the main contributors to the Great Depression• Relative undervaluation of the renminbi to thedollar, representing a trade barrier given China tradesurplusWorldTurningPoints
  27. 27. XXI Century CrisisChanges: global economic powerAcceleration of changes in the distribution ofglobal economic and financial power• Uncertainty• Volatility in financial markets• Race to control natural and energy resourcesBefore 2020 projections indicate that China will be the largest economy,followed by US, India, Brazil and Japan, with no European economyranking in the world top 5WorldTurningPoints
  28. 28. XXI Century CrisisEurope and the United StatesErosion of the growth potential of manyadvanced economies• Persistent high unemployment : young and older groups• Heavy debt burden: tax increases and reduction in governmentservices• Years of financial deleveraging and capital expensesas banks clean balance sheets• US 100 years dominance in R&D jeopardized: hegemony on thedeclineChina and India educate more than 700.000 engineers annually. In the wind powerhigh tech field four of the 10 largest turbine manufacturers are chineese, oneIndianWorldTurningPoints
  29. 29. XXI Century CrisisDeclining European exportsYet not too bad for Spain: suffers the smallestdrop among the six major European vendors(Germany, Holland, France, Italy, Belgium)WorldTurningPointsFrance 3,85% to 3,14 % 6thItaly 3,4% to 2,76 % from 6thto 9thGermany from 1sr to 3rdSpain 1,76% to 1,70 % (-9 %)World exports ranking 2008 -2012World Trade Organization 2013Lower labor costs, productivity gains, labor adjustment, more flexibleworking conditions and lower absenteeism
  30. 30. XXI Century CrisisSome Spanish StrengthsExport base growth and diversification (2008-2012)Growth of the export base2008 101.400 export firms2012 136.000 export firmsGeographic diversification2008 68% of exports to the euro zone2012 55% of exports to the euro zoneWorldTurningPoints
  31. 31. XXI Century CrisisEmerging markets export growthWorldTurningPointsSouth Korea 2,63 % to 3,02 % from 12 to 7thChina 8,9 % to 11 % from 2 to 1stSaudi Arabia 2,14 %Tailand 1,3 %World exports ranking 2008 -2012World Trade Organization 2013
  32. 32. XXI Century OutlookWorldTurningPoints Opportunities
  33. 33. XXI Century OutlookWorldTurningPointsOpportunities graph:
  34. 34. XXI Century OutlookWorldTurningPointsChina, EU, India, USA
  35. 35. XXI Century OutlookWorldTurningPoints“Stop calling themdeveloping countries” graph: Rosling
  36. 36. XXI Century OutlookWorldTurningPointsChallengesHans Rosling
  37. 37. Olga Gil, you very much #EOIThank youYour questions
  38. 38. Guillén, Mauro, and Ontiveros, Emilio. 2012. Global Turning Points. . NewYork. Cambridge University PressKrastev, Ivan. Can democracy exist without trust?. TED Talk[]Rosling, Hans. 2009. Let my data set change your mind set.éditos imágenes y fotografía, referenciados en cada foto, Olga Gil.YouTube y también en: