A plan of any global player in business or government has to take cognizance of the underlying threats that can diminish the progress of economic activity. While the economic effects of these future challenges are uncertain, taking account of them within a medium term planning horizon is well advised. In hindsight, there are lucrative opportunities in the environment that one can innovatively take advantage off, yet the threats, if not understood can debilitate economic progress. Most of the greatest threats to the global economy, as described in the ensuing essay, have their genesis in poor decision made by leaders in an environment characterized by, few resources to feed a growing and aging population and manifest as problems for energy sustainability, access to potable water, food sustainability and population aging while the others threats – religious/social tensions and viral pandemics, cyber space anarchy and climate change – seem to follow man at each stage of progress.
The greatest threat to the global economy continues to be the unfortunate decisions implemented by today’s leaders. The world would have been very different if the recent economic crisis did not occur. This crisis was allegedly spawned by financial professionals who saw the opportunities to take advantage of financial innovations for short term gain, ignoring risks and ethical practices. This disaster that was kicked off in the Unites States and impacted the financial systems of the world and by extension the economy. Decisions to continue demolishing the Amazon and Guyana’s rain forest lacks miserably from being sustainable as no considerations are given to the people who are yet to live on the planet. Each day that a decision is taken by a leader to make short term gain limits the progress of the global economy. Profits have to be made in order to sustain jobs today but not at the expense of the lives of tomorrow.
The threat to energy sustainability is paramount among the greatest threat to the global economy. Thought use is being made of solar and hydro energy, presently, energy is obtained largely from non-renewable resources which is used to fuel transport, food production, heating systems and factory operations. As such, difficulties in accessing these resources will create problems for economic activity and thus sustainable development. Apart from these energy sources being almost depleted, the problems in accessing a cheap and sustained supply of these resources underscore the risk to the progress of the global economy in the future. Furthermore, with demand of these resources outstripping supply and given the attempts of countries’ to secure access to them has escalated the present threat of energy sustainability into an energy crisis (Simmons, 2006).
Within seven years the amount of safe drinking water has fallen from 165 liters a day in 2003 to 155 liters a day in 2010, (Grimond, 2010), underscoring another critical threat to the global economy. Fresh water apart from being needed to satiate the need of the human body is required in factories, farming and animal rearing. If the present trend is extrapolated, taking away the effect of global warming then we can expect for water supply to dwindle to about 148 liters a day in five years. This fall in supply is expected to be stretched thinly to quench the thirst of an increasing population and for the required amounts for agriculture and meat production. With demand overtaking supply, water wars have been ensued, notably between Thailand and Laos and South Africa and Lesotho. Although, there are global pursuits to cut the abuse of fresh drinking water, it is feared that these may not materialize timely enough.
The threats to an access of potable water supply and energy sustainability also threatens food sustainability. In fact, given this ‘perfect storm’ as coined by some writers – the phenomenon of an energy crisis, climate change and increasing population it is improbable that the human kind will be able to feed itself in the future unless draconian actions are implemented. In fact, in the near future those in authority may have the arduous task of prioritizing limited arable land space, energy needs and water towards its many economic uses including food production. Clearly, there is the boon of genetically manufactured food which economies can take advantage off; however, there is no verification of the nutritional quality of this food or the sustainability of it. The severity of the threat to food sustainability is captured in the fact that the world’s population is growing by approximately 1.2% per year but food yields must rise by 1.5% per year (Shank, 2011) to accommodate this growth in population plus rising demand for animal feed.
Another significant threat to the global economy is the growth in population but in particular the growth in the ageing population. People are living longer given the advancements in medical technology. However, an ageing population continues to present problems to both healthcare and welfare institutions. In fact, although health care will provide life extensions, an ageing population will stretch it limits. As such, we will see fake drugs infiltrating the healthcare systems, aged individuals opting for procedures that may have negative side effects and the increasing cost of basic healthcare. Critically, with the ageing population, the young workers may be asked to fork out larger amounts of welfare payments in order to cover the needs of more retirees. Eakins et al (2009) corroborates the problem that retirement pension funds, both private and public are grossly underfunded. Underfunded pension funds can mean two things: that retirees live like paupers or the working population pays out more from their pockets. There is a clear incentive to maintain a healthy workforce but this continues to be countered with sensitive issues developed around the retirement age and social welfare systems.
Viral pandemic and religious and social tensions have the potential to wreak havoc to the global economy. Viral strains are always strengthening and scientist believe that the human species is overdue for a viral pandemic, given that viral pandemic occur in cycle of 30 years and the last was the in the 1970. A threat of a viral pandemic is worsen given the overpopulation on some cities and the lack of health care for everyone. Also, given the use of hormone therapy treatment in humans and in the food we eat it is difficult to foresee how a viral strain will affect us. Another similar threat is religious and social tension. Historically, religious tensions have existed between, Protestants, Catholics, Jews and Muslims. Today these religious tensions have catapulted into social tensions and are finding their way in trade negotiations, political governance and world development issues, with either side wanting to uphold its religious ‘modus operandi’. This has resulted in the Arab spring, the chaos in Liberia, Syria and which is now filtering into Lebanon. These tensions retard global development and are a significant threat to economic progress.
The boon of technology has made us increasingly connected, as we can socialize, bank, network and work via the internet. This may controversially result in the reduction of deep thinking as underscored by the book ‘ The Shallows’ but even worst some can use this boon to launch a cyber-attack. A cyber-attack is made easy as major stock exchanges, airlines, government offices, (Clarke, 2011) retailers and hospitals over the world transmit data over some form of internet connectivity. As such, a cyber-attack can result in one gaining access to credit-card numbers, personal details, and secret government data. Such an act adds distrust in the economy and hampers economic development. In fact, the prospective of a cyber-attack is so keen and has the effect of tilting an economy that it has been dubbed ‘cyber terrorism’.
Climate change is yet another ‘heated’ issue that is expected to be one of the greatest threats for the global economy in the near future. Climate change has clear implications for water and food security but for islands like the Maldives it has significant problems for their existence. Additionally, islands like Trinidad and Tobago have already been affected by sea water polluting the bed of underground fresh waters and it is expected to continue given the increase in sea water levels projected. Climate change might be a cycle but it has serious effects of the global economy.
Each one of the greatest threats to the global economy described above can indeed debilitate the progress of the globe should they materialize. Obviously, these threats do not simply ‘pop up’ but are created in an environment much like the one we live in today. Threats to food, energy and water security are just as pressing as the threat posed by an aging population. In trying to mitigate these threats decision makes must be cognizant of the threat to climate change, viral pandemics, cyber-attacks and religious and social tensions. The decision made by our present leaders about how resources are used to meet the needs of today has to be autographed by a keen sense of sustainability in order for these treats to be mitigated.
- Clarke, R. (2011). Cyber Attacks Can Spark Real Wars. The Wall Street Journal.
- Eakins, F. M. (2009). Financial market and Instutitions. Boston: Prentice Hal
- Grimond, J. (2010). For want of a drink: A special report on water. The Economist, May.
- Shank, G. (2011). Feeding the world: The 9-billion people question. The Economist.
- Simmons, M. R. (2006). Twilight in the Desert : The Coming of Saudi Oil Shock and the World Economy, . US: John Wiley & Sons .
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