Question

What are the major trends in the world economy in the first two decades of the twenty-first century? How do these trends impact global marketing decisions? Cite several subtrends that relate, in your opinion, to these major trends.

Answer 1

The first trend is to shift the locus of economic activity and dynamism to emerging markets such as China and within those markets to cities. These emerging markets are undergoing simultaneous industrial and urban revolutions, shifting the east and south center of the world economy at a rate never before seen. As recently as 2000, 95% of the Fortune Global 500 including Airbus, IBM, Nestlé, Shell, and The Coca-Cola Company, to name a few were headquartered in developed economies.

The second disruptive force is the acceleration of technology's scope, scale, and economic impact. Technology — from the printing press to the steam engine and the Internet — was always a great force to overthrow the status quo. Today's distinction is the sheer ubiquity of innovation and the pace of change in our lives. It took more than 50 years until half of American homes had one after the telephone was invented. In order to attract 50 million listeners, it took radio 38 years. But in its first year, Facebook attracted 6 million users and multiplied that number 100 times over the next five years.

Accelerated adoption is calling for accelerated innovation. Developers created around 150,000 applications in 2009, two years after the launch of the iPhone. In 2014, the figure had reached 1.2 million and over 75 billion cumulative apps had been downloaded in users, more than 10 for every person on the planet. In recent years, as rapid as innovation has multiplied and spread, it is about to change and grow at an exponential rate beyond the power of human intuition to anticipate. Power and connectivity processing are just part of the story. Their impact is multiplied by the concomitant data revolution, which places unprecedented amounts of information in the hands of consumers and businesses alike, as well as the proliferation of technology-enabled business models, from online retail platforms like Alibaba to car-hailing apps like Uber. With these mutually reinforcing powers, more and more people will enjoy a golden age of gadgetry, instant communication, and seemingly boundless knowledge.

The people are getting older. Fertility is falling, and dramatically the world's population is graying. While aging has been evident for some time in developed economies Japan and Russia have seen their populations decline in recent years— the demographic deficit is now spreading to China and will soon reach Latin America. For the first time in human history, aging may mean that in most of the world, the population of the planet will become a plateau. Thirty years ago, in the few countries with fertility rates substantially below those needed to replace each generation—2.1 children per woman — only a small proportion of the global population lived.

Between 1980 and 2007, global capital flows expanded 25-fold. In 2009, more than one billion people crossed borders, more than five times as many as in 1980. All of these three types of connections paused during the 2008 global recession and have only slowly recovered since then. But the connections forged by technology have marched uninterruptedly and with increasing speed, initiating a dynamic new phase of globalization, creating unparalleled opportunities, and encouraging unexpected volatility.