From trade wars and resource depletion to the rise of AI and spiralling debt, the world is full of risks for business leaders to worry about. What are the biggest barriers to growth? Influential economist Dambisa Moyo identifies the six big ones – and strategies for surmounting them
This year was not a week old when the first portent of impending economic doom hit the headlines. In an interview with CBS News, artificial intelligence guru Kai-Fu Lee, former president of Google China, said that 40 per cent of jobs could be automated within the next 15 years.
His forecast will have sat uneasily with leaders still worrying about the International Monetary Fund’s prediction in October that the US-China trade war could make the world a “poorer and more dangerous place”, its chief economist warning of long-term impacts on businesses and households around the globe.
Add to these factors the Brexit-fuelled uncertainty swirling around Europe; the wider and increasingly vocal discontent about income inequality; climate-change activism; and a host of other international sociopolitical and economic risks, and we have a world that’s complex and turbulent enough to make any leader feel helpless.
How can we better understand what is happening around us and plan accordingly? Step forward Dambisa Moyo. The Zambian-born macroeconomist, who serves on the boards of multinationals including Chevron and 3M, is respected for her ability to make sense of the global picture and offer new insights for business and political leaders alike.
An alumnus of the Time 100 list of the world’s most influential people, she has given TED talks that have been viewed more than four million times. Her bestselling books have advocated shaking up some of the world’s longest- established systems – even including, in 2018’s Edge of Chaos, democracy.
In the following exclusive interview, Moyo assesses the state of the global economy and identifies six “headwinds” hindering growth – issues concerning technology; population growth; income inequality; debt; resource scarcity; and declining productivity – and discusses measures that British firms can take to prepare for an uncertain future.
How would you summarise the state of the global economy?
In short, it’s low and slow. There isn’t a single country whose GDP is growing at the seven per cent per year required to double per-capita income in a generation. If you look at studies such as the International Monetary Fund’s World Economic Outlook, the view is that we’re unlikely to see the growth rates that we saw before 2008 ever again. McKinsey’s studies talk about growth over the next 50 years being only half of the rate of the previous 50. Growth is weak in developed and emerging economies alike – it’s three per cent in the US and even China is growing at only just over six per cent. This presents a challenge if we’re to put a dent in poverty and make meaningful progress.
What are the big barriers to growth? Let’s start with technology.
At the macro level, it’s the risk that rapid tech advances might lead to a jobless underclass. The Office for National Statistics has estimated that 1.5 million workers in the UK are at high risk of losing their jobs to automation. To paraphrase Henry Ford, if people aren’t earning enough, or there’s no community to buy our products, we go out of business. For individual firms, it’s the challenge of staying innovative cost-effectively and reaching customers quickly. It would be remiss of me not to also mention cyber risks – how do we ensure resilience in the face of nefarious intent?
What about the opportunities?
They exist for those organisations that embrace transparency. In the information age it’s easy for buyers to learn about the provenance of your products – how much carbon was emitted? What’s the average wage of your employees? These things matter, particularly to the younger generations. In the past you might have avoided those questions, but now companies are being held to account. In future, firms operating without a moral context will struggle to survive.
What problems will the population explosion create?
The time we’re living in is unique. We have never before seen the speed of population growth we’re seeing today – and never will again after the year 2100, when the world’s population will plateau at about 11 billion. Furthermore, there is a skew towards population growth in emerging markets whose economies are extremely sluggish. We must appreciate not only the quantity but the quality of the workforce. Businesses are already struggling to attract workers with the right skills for the technology era. A shrinking talent pool poses a danger to companies and the global economy. There will also be issues relating to disorderly immigration, pressure on natural resources and environmental sustainability.
What can British business leaders do in the face of such huge global forces?
As we move towards Brexit…
The full interview with Dambisa Moyo can be read exclusively by IoD members in the latest edition of Director magazine, out Thursday 25 September
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