Life in 2050: A Glimpse at the Economy in the Future
Welcome to the second installment in the "Life in 2050" series! In the first installment, we looked at how advances in robotics, cybernetics, biotechnology, computing, and autonomous systems could shape warfare. In our second installment, we will look at how technological, political, social, and environmental change could shape the future economy.
Much like the size and shape of future battlefields, the evolution of trade, commerce, and global marketplaces is rather difficult to predict. After all, wherever human beings are involved (and in large numbers), chaos is sure to ensue! Still, there are a few significant changes on the way that cannot be denied, and which economists are preparing for. They include, in no particular order:
- Population growth (predominantly in urban centers)
- Growth of non-western economies and markets
- New technologies, industries, and professions
- Changing temperatures, weather patterns, and water shortages
- Renewable energy and sustainability
The bottom line is that the future economies will simultaneously be driven by abundance and scarcity, where more people will need to be sustained using less in the way of resources. This challenge not only has the potential for a lot of uncertainty and chaos, but it will also likely foster the development of solutions.
According to a 2019 report compiled by the United Nations' Department of Economic and Social Affairs — titled "World Population Prospects 2019" — the global population is expected to reach 9.74 billion by mid-century. However, the addition of more than 2 billion people will not be equally distributed between the world's nations.
Whereas Asia has been the greatest contributor to the global population since the mid-20th century, population growth there has been slowing since the beginning of the 21st century. By 2030, Asia's population growth is expected to plateau, and the population of the continent is expected to stay in the vicinity of 5 billion people until 2050.
From that point onward, the only continent to experience a significant increase in population growth will be Africa. Currently, Africa has a population of 1.36 billion people and is projected to reach up to 2.5 billion by mid-century (that's an increase of about 83%). Nevertheless, by 2050, Asia will still be the most populous continent, with a total population of about 5.29 billion.
Africa will be the second most populous continent, with an estimated population of 2.49 billion. Latin America and the Caribbean will be third with an estimated 710 million, followed by Europe (705 million), North America (430 million), and Oceania (60 million). As always, the factors driving this growth will be economic, social, and technological in nature.
Another important aspect of population growth in this century is where it will be concentrated. Today, roughly 56% of the global population lives in urban centers instead of rural settings, which works out to about 4.4 billion people. By 2050, the global urban population is projected to increase to 6.6 billion, or roughly 68% of humanity.
This will place additional stress on environmental systems that are already under severe stress by major cities. Urban expansion means that more land needs to be cleared to build infrastructure, more water needs to be diverted for utilities, more electricity needs to be generated, and more agricultural land needs to be set aside.
Since urban populations will be growing far beyond their rural counterparts, there will be proportionally fewer farmers in addition to less farmland. Coupled with the effects of climate change (see below), this means there will be many more mouths to feed in 2050. At the same time, the resources we'll need to do so will be in shorter supply.
However, the problem goes beyond food production. While every new child born between now and 2050 will be another mouth to feed, they'll also be another person in need of shelter, utilities, sanitation, medical care, education, and eventual employment. When these needs are not met, the end result is generally an increase in violent crime, terrorism, and humanitarian crises.
Luckily, it's not all doom and gloom. For, as the logic goes, every new life is a mouth to feed, but also a pair of working hands and a brain for problem-solving. The same holds true for urban environments, which are a big draw on natural resources but also centers for innovation and creative pursuits.
The (Shifting) Wealth of Nations
The global economic balance is expected to change significantly between now and 2050. While much of this is well underway, the pace of change is predicted to accelerate in the next three decades. According to a 2020 Bloomberg Economics forecast, the post-WWII economic stability enjoyed by the developed nations of the world will be coming to an end as new superpowers take their place on the world stage.
In short, the global economy will experience a shift in its center of gravity, moving from West to East and from advanced economies to emerging markets. The effect this will have on global politics, which is similarly already being felt, will intensify. For starters, China will have overtaken the US in terms of gross domestic product (GDP) by 2035 and become the world's largest economy.
By 2050, Asia's share of the global market share of GDP will grow to over 50% (driven largely by China and India). North American and Europe will account for about 20% each, while the rest of the world will account for less than 10%. In terms of which nations will be the wealthiest, the top ten today are the US, China, Japan, Germany, France, India, the U.K., Brazil, Italy, and Canada.
By 2050, this is forecast to be China, the US, India, Indonesia, Germany, Japan, Brazil, France, the U.K., and Turkey. For the first time since the "Age of Imperialism," the richest nations in the world will not all be in Europe and North America. Instead, wealth and the political influence it brings will be more evenly distributed between the continents.
Beyond the top ten spots, the largest economies will also be located outside of Europe and North America. They include Argentina, Russia, South Africa, Saudi Arabia, Vietnam, Nigeria, Mexico, Poland, Malaysia, Bangladesh, Colombia, Egypt, Iran, the Netherlands, Pakistan, the Philippines, and Thailand.
But it's not all about who has the most wealth. There's also the question of which will be the fastest-growing economies. In this respect, the countries experiencing the most significant growth in terms of GDP and per capita income by 2050 will be Nigeria, Vietnam, Bangladesh, India, the Philippines, Indonesia, Pakistan, South Africa, Egypt, Malaysia, Columbia, Mexico, and Thailand.
Once again, the markets of Asia, Africa, and Latin America will be the greatest drivers of change. Much of this will be the result of digital technology and the access it ensures becoming more widespread, to the point where every nation and person in the world can get online.
Internet of Everything
According to a 2018 report by the UN's International Telecommunication Union (ITU), more than half of the global population now has access to the internet. By 2050, 90% of the world's people are expected to have access, owing to a combination of economic growth in the developed world, the proliferation of mobile devices, and access to broadband satellite services.
In addition to people, an exponentially greater amount of mobile devices, sensors, "smart-home" appliances, and gadgets will be connected to the internet by the middle of the century. In fact, individual devices may also be "smartened" thanks to Tiny Machine Learning (TinyML) algorithms, predictive algorithms, and other forms of neural-net software.
Speaking of technology that imitates how humans process information and learn, ongoing studies into human neurology could well lead to the widespread adoption of neural implants. With devices like Neuralink, people will be able to interface with computers and devices, access the internet, do online banking, blog, surf, and create content through the simple act of thinking!
These developments would further accelerate the transition from a physical to a digital economy, where growth is data-driven and the most valuable resource is content. It will also give rise to the so-called "Internet of Things" (IoT) — where the real world will come to resemble the internet. This will have a profound effect on society, by improving efficiency and anticipating behavior in advance.
Concordantly, information security will become far more important, as privacy becomes a thing of the past. With cameras, sensors, and digital markers everywhere, and increasingly sophisticated AI systems mining the data to anticipate patterns and spending habits, every move a person makes will be recorded and cataloged in the cloud.
If outside parties were able to gain access to this data, it could lead to new levels of identity theft, extortion, and online harassment in the near future.
New Industries & New Jobs
Perhaps most significant of all is the way that accelerating technological trends will alter the way people work, communicate, shop, and consume. This will naturally lead to all kinds of new occupations, new opportunities for investment, and a general overhaul in how people "do business." Four major trends will coincide to drive this change, among them:
Technological Unemployment: Automation will continue to advance and lead to a vast increase in efficiency, but at the cost of eliminating a number of jobs. This will take not only the form of robotic systems but also machine learning and software that will remove the need for human analysis and oversight.
Increasingly Flexible Work: With automated systems handling more and more in the way of physical production, job growth will be increasingly focused on the creation of content and intellectual property. Combined with wireless technology, far more people will be able to work from home or remote locations and make their own hours.
Options for the Rich and Poor: In the developing world, much industrial work will be eliminated by the introduction of robotics and automated production. This will speed a new trend, where emerging nations and markets are forced to adapt to the high-tech, data-driven economy of the future, and the problems of "downsizing" and redundancy shift to the developing world.
Cryptocurrency and Blockchains: The rise of the "industrial internet" will create new redundancies but also opportunities for entrepreneurs. As more and more economic activity takes place online, economic activity will be far more direct, peer-to-peer, and decentralized.
This trend towards decentralization will be facilitated by the use of cryptocurrencies, non-fungible tokens (NFTs), and the blockchains used to distribute them. These are poised to replace traditional banking and monetary transactions, but they may also be programmed to represent energy, resources, investment, and ownership.
Commercial Space: By 2050, the commercial space industry is expected to grow exponentially and reach the point where it is valued in the trillions. This will be driven by the deployment of "megaconstellations" providing telecom and internet services, miniature satellites enabling research and development, and orbital refueling services.
Space will become more and more accessible as launch costs continue to decline, owing to space planes, reusable rockets, and commercial spaceports. By mid-century, this could result in space tourism, space hotels, and even habitats in Low Earth Orbit (LEO). Commercial missions to the Moon, lunar tourism, and even asteroid mining are also likely to become a reality.
The ability to prospect and mine Near-Earth Asteroids (NEA) will lead to a massive influx of precious metals and building materials to the global economy. This is anticipated to lead to the world's first trillionaires, the devaluation of precious metals (which will no longer be scarce), and the creation of a space-construction industry.
A Warming Planet
For decades, scientists have known that Earth has been getting warmer since the late 19th century. This trend is the direct result of humanity's impact on the natural environment and fossil fuel consumption. This has led to increased levels of greenhouse gases — most notably, carbon dioxide (CO2), which increase the amount of solar radiation our atmosphere absorbs.
According to the 2018 Special Report that was released by the Intergovernmental Panel on Climate Change (IPCC), global temperatures are forecast to increase by an average of 2.7 °F to 3.6 °F (1.5 °C to 2 °C) by 2052. The 2.7 °F (1.5 °C) threshold is the target goal established by the 2015 Paris Agreement, which seeks to mitigate climate change through the reduction of CO2 emissions.
While this may not sound like a lot, it is important to remember that this is an average increase — which includes annual and regional variations. An increase of 2.7 °F (1.5 °C) to 3.6 °F (2 °C) will mean hotter summers, more precipitation, more instances of extreme weather, and the disruption of natural systems that humans rely on for their survival and livelihood.
These temperature increases will be felt strongly in Central and Eastern North America, Central and Southern Europe, the Mediterranean, North Africa, Western and Central Asia, and Sub-Saharan Africa. In regions located nearer to the poles (Canada, Russia, South Africa, and South America), the length of the frost-free season will likely increase, as will the corresponding growing season.
Because of this, countries located closer to the poles will experience a boom in agricultural production. At the same time, countries that have the largest supplies of renewable freshwater (Brazil, Russia, and Canada) will be forced to contend with increasing demand and may face serious repercussions if they do not scale up extraction to meet it.
Closer to the equator, temperature increases will mean more precipitation in the winter, which will mean more flooding, coastal storms, and runoff. During the summer, the increased heat will mean more drought, desertification, and the lowering of water tables. The combination of these extremes will also mean more in the way of erosion, runoff, and depletion of topsoil.
Similarly, heavily-populated areas along the coasts and major rivers that empty into oceans will be subject to rising sea levels. According to recent research, an estimated 4.6 billion mi² (7.4 billion km²) of land will flood or be underwater by 2040. This will have a massive economic impact as major urban centers are forced to contend with floods that become worse with every passing year.
By mid-century, several major cities are projected to be abandoned (or significantly depopulated) due to rising tides, flooding river systems, or sinkholes (caused by groundwater extraction). This will not only trigger migrations and refugee crises but will have a major impact on global markets as financial centers are lost.
Another trend, which is already well underway, will be the loss of glaciers and polar ice caps. According to a study released in April of 2020, simulations conducted by the Sea-Ice Model Intercomparison Project (SIMIP) have shown that the Arctic Circle will experience ice-free summers by 2050.
The loss of Arctic sea ice will have a profound impact on the planet, influencing ocean circulation and causing open water to absorb more heat. This, in turn, will lead to an increase in ocean temperatures, as well as the potential release of methane deposits beneath the Arctic Ocean.
A similar situation is happening in Siberia right now, where the disappearance of permafrost is allowing caches of subsurface methane to be released into the atmosphere. This creates a vicious circle, where the warming trend results in feedback mechanisms that cause even more warming, and so on.
In many parts of the world, rapid industrialization and population growth have led to water shortages. In China, Egypt, India, Israel, Pakistan, Mexico, and the United States, this has led to desperate measures, and even international incidents. With the added stress caused by climate change, freshwater is projected to become increasingly scarce by 2050.
This will inevitably lead to "Water Wars" in parts of the world as neighboring countries fight to control access to limited supplies of freshwater — especially where international river systems are concerned. These rivers are essential for drinking water, irrigation, and sanitation wherever they flow, so neighboring countries are not likely to be in the mood to share when they begin to dry up.
In recent years, "water futures" have emerged and are now being traded like all precious commodities — similar to oil, precious metals, and stones. So, in addition to having a significant geopolitical and environmental impact, the disappearance of freshwater sources will also be played out in financial markets.
In the meantime, the scarcity of fresh water will continue to drive investment in desalination technology, water reclamation, and closed-loop environmental systems. This will be especially apparent in how architecture will incorporate ecology (aka. "arcology") in order to ensure greater sustainability in urban space.
On the plus side, the impact of climate change will also lead to positive developments in the manufacturing, energy, and transportation sectors by 2050. For starters, renewable energy, electric vehicles, and other "green technologies" will be far more common due to declining costs, competitive pricing, and the need to curb greenhouse gas emissions.
In 2018, 28% of global electricity was generated from renewable energy sources — a combination of hydroelectric (45%), nuclear (28%), wind (13%), solar (6%), biofuels (5%), and other methods (3%). By 2050, the U.S. Energy Information Administration (EIA) anticipates that renewables will generate 49% of global electricity, followed by natural gas (23%), coal (23%), and nuclear (5%).
Solar will occupy the most significant share of renewable sources, accounting for 38% of all electrical generation, while wind will grow to 34%, hydro will reach 27%, and biomass and other fuels will account for the remainder. For solar and wind power, the greatest contributions are expected to be from China and India.
By mid-century, China will account for 37% of solar and 35% of wind generation worldwide, while India will account for 24% of solar and 22% of wind. Hydroelectric power use will be more evenly distributed, with China (23%), the EU (17%), Brazil (15%), and India (8%) occupying the largest share.
Renewable energy is already having a significant impact in developing nations, where access to centralized grids is limited, and utilities are considered unreliable. In these places, portable solar lights, portable wind turbines, and appliances that use alternative energy sources are providing sustainable energy for small communities.
Due to the ongoing loss of arable land, cities will also become greener as urban farming, vertical farming, aquaculture, hydroponics, community gardens, and buildings that combine architecture and ecology into a single design (arcology).
Other changes will include electronic vehicles (EVs), which will make up over half of the automobile market by 2050. Advances in Tokamak fusion reactors are also expected to lay the groundwork for fusion energy, which is projected to become commercially available by 2050 and after.
The economy of 2050 won't be anything most people would recognize today. Physical cash and in-person banking are already giving way to e-banking and e-commerce. By 2050, it will give way to cryptocurrencies and distribution nodes that are not subject to regulation or controlled by any centralized government or financial institution.
Between advancements in technology, more people, more connectivity, and the need to do more with less, it's hard to know how it will all play out. On the one hand, the world may find itself being dragged deeper into ecological damage and resource shortfalls, triggering all manner of crises and struggles.
On the other, it's possible that renewable energy, reduced emissions, smart living, commercial space, and a growing focus on sustainability, humanity will enter a period of "post-scarcity" economics. One thing is for sure, though. What we do between now and 2050 will determine what happens beyond that point. We could be headed for disaster, or destined for something better.