November 24, 2020

The World in 2021

A masterclass on The World in 2021 was hosted by Founding Fuel, a digital media company based in Mumbai, and anchored by Indrajit Gupta, the founder of Founding Fuel. SFG President Sundeep Waslekar was invited to speak on the panel along with Frank Richter, Chairman of Horasis Visions Community; Niranjan Rajadhyaksha, Research Director of IDFC Institute; and Venkat Raman, Associate Professor at the Indian Institute of Management, Indore. About 125 leaders from different sectors and geographies joined the masterclass.

The discussion began with a review of 2020. The speakers identified following trends of the year that is about to end:

·      Covid 19 crisis leading to economic lockdown and paralysis of world leaders in responding to early signals

·        Unrest in many countries including Thailand, Chile and France- could be the sign of a larger revolution in the future

·        Accentuation of economic disparities because of the pandemic

·        Greater digitalisation in companies with a rethinking of business models, creating greater transparency and reduction in corruption

·        Increase in global warming with a large number of forest fires

·        Escalation of nuclear arms race with the development of hypersonic missiles

·        Conflict between the United States and China.

Some of the lessons drawn 2020 include the following:

·        Years of crisis have always been years of discovery as seen in the Renaissance in Europe; the advancements made in the Second World War. The same is true of 2020 in science and technology, despite the pandemic

·        Previous economic crises were generated from within the economic system. Covid 19 was an exogenous shock

·        The nation state in back in the game as international systems have not been able to cope or create a coordinated response

·        Inequality has laid bare the fissures in society.

Looking Ahead at 2021

The election of Joe Biden will have substantial impact on the shape of things to come in 2021. There is a considerable hope that the multilateral order will be restored. President-elect Biden has already indicated his commitment to join the Paris Accord on climate change. He is also expected to bring the United States back to the World Health Organisation, build relations with Europe, and take the United Nations more seriously. If he renews the New Start Treaty in February 2021, it will strengthen the arms control regime.

It is more ambiguous how the relations between the United States and China will shape next year in substance, though we may see a calm rhetoric. China has developed many technological and economic strengths which will make it difficult to bargain with it. China has entered into agreement with Japan and Korea to develop a free trade zone in Asia: Regional Comprehensive Economic Partnership involving 15 nations from Asia Pacific region and one third of the world’s economic output. India has chosen not to join the group, which may work to its disadvantage in the new supply chains that will emerge in the RCEP area.

There will continue to be a US – Russia rivalry, though US – China is what will hog the media spotlight.

There will be economic recovery in the next year or two. However, high GDP growth rates will be deceptive as GDP of many countries will bounce from the low levels reached in 2020. Therefore, sustainability and quality of such growth will be important.

Globalisation has led to a spurt of nationalism. The epidemic has instigated activities where more automation is required. This will lead to more job losses.

There is a realignment taking place in the Middle East with Israel and the Arabs (Saudi Arabia, UAE, Bahrain) improving their relationship. Turkey and Iran are on the other side.

Next year will also see the beginning of the shifting of the basic structure of the world economy. President-elect Biden has proclaimed his ambition to make the United States carbon neutral by 2050. While addressing the UN General Assembly in September, President Xi Jinping of China announced his ambition to make China carbon neutral by 2060. Europe has also indicated its aspiration of carbon neutrality before 2050. With three big economic zones in the world moving towards carbon neutrality, trillions of dollars of resources will be diverted to renewable energy, electric vehicles, and other sustainable economic activities. This will disrupt existing industries but provide many new opportunities. The new economy will require China as it is the producer of 97% of rare earth elements which are vital for a shift to green economy.

To view the session on YouTube, https://www.youtube.com/watch?v=WWCp4DXIy_U