Economic growth is tepid, at best, in many parts of the world as the shadows of the Global Financial Crisis (GFC) linger. Our world needs a powerful economic boost and no matter how much it is needed, this boost has not been delivered through traditional measures including fiscal, monetary, and trade policies. The benefits from these policies have now been exhausted. Debt restructuring and financial engineering simply cannot supply the solution to address our current economic malaise; only strong, sustained economic growth can achieve it. The question remains: How can we trigger sustainable economic growth for all?
The truth is, to achieve sustainable economic growth, we can no longer ignore the powerful demographic trends that command a new economic order since such trends fall under the "Uncontrollable Challenges" category.
From an economic standpoint, the world is currently divided into 3 categories: High Income Countries (HIC), Mid Income Countries (MIC), and Low Income Countries (LIC). In 1987, the HIC constituted 22.3% of the world population. Today, that number has drastically decreased to 15%, and with a continued rate of decline, this percentage is estimated to reach 7.8% by 2041. In contrast, the MIC and LIC now comprise 45% and 40% of the world’s population, respectively, and are growing rapidly.
In the HIC, birth rates are low; the population is aging, yet salaries remain high. This is an efficient and productive community challenged with low market demand. Meanwhile in the MIC and LIC, birth rates are high, population is young and strong, but salaries are often 20% or less of those in the HIC. This is a very densely populated community challenged with low buying power.
The facts are clear, the HIC cannot clone people, and cannot open the borders wider. The strongest and the only option for them is to build the buying power of the MIC and LIC, thus creating a vast new market for their products and services. Meanwhile, the strongest and the only option for the MIC and LIC is to commit to business excellence to achieve efficient and transparent operations, thereby attracting national and international investments resulting in increased buying power.
The bottom line is that we must enlarge the global economic “pie” instead of competing on the same one that we have today. The first step has already begun; by expanding the G8 to the G20. This makes explicit the interdependence of our global economy. It makes clear that HIC, MIC, and LIC must connect in a smarter way to sustain economic growth for all.
The WLC's tangible, global solution, which enhances trade efficiency and security to digitally connect the global B2B marketplace, represents the required innovation for future economic prosperity.
