The Future of Almost Everything, page 8
By 2025, most people on the planet will be in Asia. Indeed, 85% of the world’s population will be living in emerging markets or today’s developing countries by then, mostly in cities. Only 1 in 7 will be in today’s developed nations, driving less than 10% of the world’s economic growth.
Unsustainable population growth
More than 9 billion people will be living on earth by 2040, around 2 billion more than in 2014, despite the fact that the number of children born per couple globally has already fallen to only 2.4 (replacement level is around 2.2).
Many experts predicted that population would peak at just over 9 billion by 2050, but African nations like Nigeria still have far higher birth rates than those models assumed. We could see as many as 11 billion people on earth by 2100.
Many nations have young populations, that is, with up to 50% of their population under 25 years old. Even if there is not a single baby born in these communities over the next 20 years, this one age-bulge guarantees a boom in the number of parents over the same period – barring global plague or a catastrophic world war.
A huge challenge will be to feed, clothe, shelter, power up and water even 9 billion people without destroying the planet, especially with economic growth and increasing personal incomes.
Population growth cannot be slowed suddenly without creating other crises, with huge populations of elderly people that will dwarf the problems faced in Europe or Japan today. Expect 1 billion people over the age of 60 by 2025, and 1 million people over 90 in Italy alone by 2026 – enough to alter the outcomes of every election.
Vast populations are on the move
Around 1 billion people will be drawn to cities over the next three decades, in search of a better life. Over 300 million people will migrate from rural areas to cities in China alone over the next 25 years, 300 million in India, and a further 475 million across Africa. Half the world’s GDP growth over the next 20 years will come from around 450 cities in emerging markets, mostly places that global executives have never heard of, often in nations they have never visited.
These cities will create the world’s greatest new markets, with hundreds of millions of new city retailers – many of whom will be street traders. Tens of millions of new car repair workshops, furniture makers, air-conditioning installers, fast-food sellers.
This growth will generate clusters of new global companies. Over half of the world’s largest 500 corporations will be based in emerging markets by 2035, compared to just 5% in 2000.
Wealth contrasts will drive migration
When a third of the entire human race lacks basic necessities, such as running water, basic sanitation, and adequate food, it is hardly surprising that these people want to move to where such things are taken for granted. More than half our world is living on less than $3 a day, and 22,000 children die each day from poverty. Nearly 1 billion people cannot read or write. Every day around 840 million are hungry. Almost one in three of those in the least developed countries die before the age of 40.
The wealthiest 1% in our world own 50% of the world’s wealth and 20% own 75% – their income per head is 60 times that of the poorest 20%, and the gap is increasing rapidly. The richest 80 people on earth own as much wealth as the poorest 3.4 billion people. Around 1,600 billionaires own $6.4 trillion, more than the combined income of the poorest 120 countries in the world. In America, the wealth owned by the top 3% in the country rose from 51.8 to 54.4% between 2007 and 2013 while the share held by the bottom 90% fell from 33.2% to 24.7%. And the same kind of shift has taken place in most other developed nations.
The contrasts are greatest in rapidly growing cities. In Mumbai, for example, in the shadow of the most expensive real estate in the world, you will find slum dwellers in shacks of plastic and plywood, and street pavements crowded with sleeping workers at night.
If just 0.1% of low-income migrants become politically motivated and organised the result will be new protest movements that will dwarf anything our world has ever seen.
Living in cities
More than half the world already lives in cities, of which a large number are megacities of more than 10 million people. A decade or more ago, many forecasters came out with wild, idiotic statements about declining cities. They claimed that many millions of wealthier people would move to rural areas, working virtually, driven away by noise, pollution, house prices and fear of violent crime.
It was obvious to me then that this was nonsense. As we have already seen, people love being in busy communities. They love the buzz of cities, the range of opportunities, bars, cafés, clubs, restaurants, cinemas and theatres. And crime rates in many cities have fallen significantly. Cities are good for the environment: they pack people into small areas, protecting countryside from sprawling destruction. Cities are very efficient, with smaller distances from work to home, school to home, shops to home, home to hospital and major economies of scale for rail or roads.
A billion live in city slums
In most emerging market cities a taxi driver can drive you in 15–30 minutes from a smart hotel district to jam-packed slums, where makeshift homes rise precariously to three or four storeys. Take a walk down dark and narrow pot-holed streets. You will see children and animals playing in open sewers, stagnant streams blocked by piles of stinking rubbish, tangles of electric cables strung from house to house, no running water, few pit toilets, disease and deprivation.
Yet if you have the privilege to be invited as a guest into such homes you will usually find immaculately kept rooms, mobile tech, well-educated, ambitious young people, and maybe parents with professional qualifications.
Come back in a decade and most of those slums areas you visited will be steadily developing into emerging middle-class districts, with concrete homes, running water and sewage. But another million new people may have arrived, building new shacks, and so the city growth continues.
Some slum-dwellers become millionaires
Urbanisation is creating real estate millionaires in what were urban slum districts – people who built informal dwellings on land some time ago, and somehow gained land rights, surrounded gradually by high-rise blocks of smart new apartments.
More than 2 billion people will find themselves empowered by new wealth over the next 25 years, with more choices, better access to health care, online media, e-commerce, financial services, and so on. At least 1 billion will be first-generation middle class – first to go to university; first to own a car; first to take regular holidays or own property.
Many megacities are likely to plateau in size at around 20–25 million people, as infrastructure limitations start making life unpleasant. So for every million low-wage migrants that arrive, another million middle-class workers will leave for smaller cities or towns in nearby areas. And the process of rural migration will end when the great majority have already left for cities. This is already the case in Brazil, for example, where cities like Rio de Janeiro are no longer being hit to the same extent by large waves of new migration into densely packed favelas.
Mega-infrastructure
Megacities will need more mega-facilities. Expect more new investment in infrastructure from 2020 to 2055 than in all human history – schools, hospitals, power stations, national grids, water supplies, sewage treatment, roads, railways and airports.
Linked to this, we will see many booms and busts in real estate, construction and commodities.
Much of this infrastructure will last far longer than most people think. The impact of each growing city on the landscape will be clearly visible for at least 30,000–50,000 years into the future, even if that city is abandoned or destroyed for some reason. Many of our new motorways, railway cuttings, embankments, quarries, tunnels and sea ports will be used by travellers or traders for thousands of years. Consider that many Roman roads built 2000 years ago are still busy highways today. Many Stone Age earthworks are also clearly visible in rural areas, even though they were abandoned 5000 years ago.
Commodity instability
Rapid urbanisation will create instability and chaos at times in commodity markets such as steel, copper or aluminium. Expect many more large price spikes and falls as speculators try to cash in on uncertainty. Steel prices will be affected by real estate booms and busts in China, and by global overcapacity, with 1.6 trillion tons a year produced. China uses twice as much steel as India, America and the EU combined.
Mining companies will be forced to mine deeper for lower quality ores, and will need to take a 40–50-year view of prices, to recoup investment. As commodity prices rise, waste (slag) heaps will be re-mined to extract additional material. China will snap up mining rights, mining companies and mining technologies.
Countries with the greatest mining wealth will be forced to spend more on armies and internal security. They will be more likely to have ultra-wealthy leaders, see huge finance siphoned out of the nation, to have a corrupt judiciary and to experience civil wars.
They will also be more likely to have under-performing economies, because exchange rates rise as soon as commodities start to be exported. And as soon as that happens, every other exported good and service becomes less competitive, so the rest of the economy suffers.
The future of Africa will be driven by cities
Africa will continue to be the world’s fastest growing continent in industrial output, barring a regional disaster such as a new, very widespread pandemic. Despite a bloody history of tribal conflict, sub-Saharan Africa as a continent has been at peace for over a decade, with no substantial cross-border conflicts, and resolution of many civil wars.
I have worked closely with people in many countries across Africa over the last 40 years. While traditional ways of life are still found in almost all rural areas, the speed of growth of many major cities is remarkable and relentless.
Take Kampala in Uganda, which I first visited in 1988. People were dying of AIDS all around us, and a third of sexually active adults were infected with HIV. The country was also recovering from civil war. Kampala is now a vibrant, noisy, thriving, cosmopolitan high-rise city, full of hotels, new offices, and surrounded by new factories. Yet, just 25 miles out of the city, along dirt tracks through the bush, most people live in mud-brick dwellings with thatched roofs, as subsistence farmers, with no running water and unreliable power.
Expect huge investment into Africa
Businesses like Primark, H&M and General Electric are moving into Africa. National economies are being stimulated by rapid rollout of 3G and 4G mobile networks, which has accelerated mobile banking and business. Tens of thousands of Chinese nationals are staying in Africa when Chinese-sponsored contracts end, investing in local businesses. The number of scientific papers published by Africans has trebled in a decade to 55,400.
We are likely to see economic growth of 5–8% a year in many African nations over most of the next 20 years, mainly driven by growth in cities, despite regional challenges and corrupt governments. Manufacturing and service industries will grow fastest within 50 miles of sea ports, as Asia prices itself out of the global market for outsourcing due to inflation.
Nigeria – rapid migration to coastal towns and cities
Nigeria is Africa’s largest nation, and largest economy, even though average earnings per person are only a third of those in South Africa. Nigeria will soon have a population of 300 million people, up from 185 million today. It is likely that there will be more than 440 million people living in Nigeria by 2050, which will make it the third largest nation on earth by then.
For the next four decades, most wealth will be in the Christian-dominated cities in the South, because of oil, and because of relative proximity to coastal trade. Most instability is likely to be in the poorest parts of the Muslim-dominated, more rural north, where the terrorist group Boko Haram has its roots. Nigeria could see another prolonged civil conflict, as we saw in the Biafra war from 1967–1970 in which a million died, but this time the result could be partition.
South Africa will struggle to keep pace
South Africa is the second largest economy in Africa, but has seen very slow economic growth over the last decade compared to most other nations in the continent. South Africa’s greatest miracle has been peaceful transition from apartheid, widely credited to the calming leadership of Nelson Mandela, and the influence of a generation of prominent black Christian leaders like Archbishop Desmond Tutu.
South Africa’s greatest challenge is very high unemployment in many young, black communities, and white dominance of big business leadership, with huge disparities of wealth and opportunity; gated white communities and revolutionary undercurrents.
Sending money home
One consequence of urban migration is hundreds of millions of workers from the poorest nations sending money home. Most remittances in countries like Nigeria or Uganda are from young adults in cities to parents and other relatives in rural areas. Such income will be a significant part of future earnings of rural communities.
Whole industries will grow around the need to move cash across borders. Payments on mobile devices will be far cheaper and more popular than via Western Union or ‘human mules’, as people are often called who carry cash between relatives.
Global remittances are already worth over $540bn a year and contribute up to half of some nations’ GDP. Take, for example, Tajikistan at 47% of GDP, Liberia 31%, Kyrgyzstan 29%, Lesotho 27%, Nepal 22%.
Birth rate decline will add to city migration in Asia
As we have seen, a key driver of migration is people looking for jobs in cities, and an added reason for labour shortages in nations like China and Japan is low birth rate.
Travel around India today and you see children everywhere, on streets, hanging onto buses, crammed into schools – yet China’s children are hard to find. The impact of China’s one-child policy will be felt for the next 70 years, even if abolished tomorrow. The government has already relaxed some of the rules, and you will soon see more ‘double buggies’, pushed along the street by proud parents of two young children. Migrants from rural areas are continuing to make up the gap caused by an ageing workforce.
South Korea and Japan need more babies
The same is happening in South Korea. Just 40 years ago, the average couple in South Korea had six children or more. By 2014, that had fallen dramatically to 1.1. This is typical of what is happening in parts of every nation. Global studies show that when income per household reaches around $12,000 a year, numbers of children per couple start to drop dramatically. But we need an average 2.3 children per couple to maintain city population without migration.
If the fertility rate continues to fall in South Korea, without greater immigration, by 2050 South Korea’s population will have fallen from 50 million to 40 million, of which 38% will be retirement age.
In Japan, unless something changes, over 1000 rural towns and villages may have no women of child-bearing age by 2050. The government estimates that the population will fall by a third from 127 million over 50 years, and that there will be only 43 million Japanese by 2110 – all because Japanese couples are having on average only 1.4 children.
Japanese society has not welcomed large-scale immigration so less than 2% of the population was born overseas. Expect this to change, following government recommendations that 200,000 new permanent residents should be allowed to enter each year. We can also expect that child-rearing will become more fashionable again, with all kinds of government incentives, promoted as a national duty for Japanese couples.
Population decline has been a national security issue for nations like Russia, which saw a fall of 10 million in a short period, although birth rates are recovering. France is now offering generous tax and benefit subsidies to encourage couples to have children.
Migrations to cities across Europe and Central Asia
From Central Asia to Western Europe, people are on the move. Kazakhstani workers to Russia, Ukrainians to Poland, Poles to the UK, and Britons to America. There are already so many Central Asian workers in Moscow that over 20% of the city’s inhabitants are Muslim.
We will see similar migrations from Africa to European cities, with growing pressures on Spain and Italy, who will at times be overwhelmed by highly motivated, younger migrant workers who enter illegally. More than 600,000 Africans are waiting at any time in North Africa, hoping to find a way to cross into Europe. Over 100,000 people a year are entering Italy illegally from North Africa, often at great risk in tiny boats, while migrants from Turkey to Greece have grown 150% in a single year, partly as a result of civil wars in the Middle East.
North Korea is sitting on a migration time bomb. At some point, the pressures on the regime will become overwhelming. In the meantime, expect more military provocations from North Korea. The end of the regime may be peaceful or result in bloody chaos, but expect the Chinese to be deeply involved in any transition.
Wherever they go, new migrants tend to settle in their own cultural communities (almost ghettos). Many will retain their customs and ways of life, alienated from their adoptive nations, adding to local tensions. Birth rates of lower-income immigrant communities will usually be much higher than in wealthy host nations. These imported baby booms will help re-balance ageing populations.
Europe was dying – but expect a baby boom
Over the past decade or two, many economists living outside Europe have been writing off Europe as a region facing rapid terminal decline, destined to become little more than a cultural museum and geriatric park. This is a superficial and misleading view of what is actually happening. However, there are reasons to be pessimistic about the EU, mainly to do with lack of leadership, stifling red tape and social costs, over-dominance by Germany, and problems faced by those who belong to the eurozone.
And it is true that in Germany, on current trends, you need eight great-grandparents to produce a single great-grand-child. That is the simple consequence of couples having an average of just over 1 child. The situation is similar in Italy, Portugal, Spain, Greece and parts of the UK.
