As the ballad goes, "the times, they are a-changin'," and so too is the context that shapes our national interests and our global relationships. In just 20 years we have gone from a bipolar world of two military, if not economic, superpowers, to a single-polar world of an economic, political and military hyper-power to today's multipolar world with competing centres of economic and political power, and evolving military balances. It has also been an intellectual roller-coaster ride from Francis Fukuyama's The End of History in the mid-1990s to Fareed Zakaria's The Post-American World a short decade later.
Clearly, the first decade of the new millennium will cast a long shadow over the 21st century. It was a decade marked by jarring and unsettling events: Y2K; terrorist attacks; Enron and a host of other corporate debacles; horrific natural disasters showcased by the digital information age; the invasion of Iraq and the absence of weapons of mass destruction; the dot-com bust; and the global financial crisis. Cumulatively, these events have sapped public trust in leadership. Overwhelmingly, they have changed the public's expectations for their governments. Paradoxically, they have created gaping fissures in the body politic about how best to meet these changed public expectations.
And while these very public events naturally captured the headlines, they represent only the tip of the proverbial iceberg of the "global drivers of change" that are now reshaping economies, societies and politics. There are four core structural trends driving this change: globalization, demographics, the information revolution and climate change. These, together with the events of the past decade, are inexorably changing the world order.
So, what shape will this new world order take? Let's start with globalization. Today's pervasive globalization has been made possible by the information revolution. It is bound together through global supply chains, global capital markets, the global Internet and unprecedented movements of people. We now inhabit a flatter, more interconnected, more wired and more competitive world than was imaginable just a decade ago.
Without this pervasive globalization, the global financial crisis would have been an American banking crisis. Without this pervasive globalization, the United States would not have been able to live beyond its means at no apparent cost for the past decade, nor would China have been able to export its way to two decades of double-digit growth. Without this globalization, supply chains would still be national rather than worldwide, and costs would be higher.
The global restructuring that globalization has facilitated will see Asia account for 50 per cent of world GDP by the end of this decade, an economic prominence last seen three centuries ago. Indicative of the pace of change is that China became the second-largest economy in the world in 2010, moving another Asian economy, Japan, into third place.
At the same time, the information revolution is reshaping how we work, how we communicate, and how we interact. We are creating a 24/7 global digital universe that is changing our concepts of markets, the value of information, our systems of social networking, political dynamics.
And the revolution is far from having run its course. Twitter will be obsolete before I ever get around to using it. The Internet and blogs are changing political campaigns. Blogs are beginning to lead - not follow - traditional news media. The growth of data on the World Wide Web is an unimaginable order of magnitude greater than trade and investment.
Overlay on this the demographics of aging. While aging has always been a personal reality, it had never been a problem for whole societies. Today, things are different. All industrial countries are aging, with impending declines in the working-age population. The impacts will be profound, affecting not only pensions systems and health care but also education, housing, immigration and economic growth. Aging will put an incredible premium on skilled workers, and will shift the "wealth of nations" to countries with younger, educated populations. The hunt for talent will become more global and more of a preoccupation of companies and countries.
If the impacts of aging are profound, the potential consequences of climate change are uncertain and unsettling. While the answer is obvious - that is, to change behaviour you have to change the price of that behaviour in a market-based system - the way forward is not. Copenhagen didn't inspire confidence that the multilateral system can manage climate change. And the responses of the major emitters don't inspire confidence that they are willing and able to tackle climate change domestically, let alone collectively. Climate change may become the litmus test of whether the G20 is effective and durable.Report Typo/Error
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