GLOBAL: THE PRE-RECESSION WORLD
The seismic economic events of 2008 and 2009, including the fall of Lehman Brothers, the nationalisation of financial institutions such as Fannie Mae and Freddie Mac and the worldwide economic stimulus packages pushed through by G20 governments, signalled a shift in world power. Prior to this the world order was relatively fixed, with a Western dominated world. Growing nations such as China, India, Brazil and Russia were viewed as mere outsourcing or labour powerhouses – allowing companies such as Apple to design their products in California, but leverage the manufacturing muscle of countries such as China to deliver at a lower cost. Economic power was not only controlled by the West, but political power too.
The governments of the US and Europe dictated world policy on important issues such as economic policy, democracy, sustainability and proliferation – with Western governments adopting a ‘policing’ role over their perceived ‘poorer’ and ‘less developed’ Eastern nations. In this environment governments and nations had fixed roles – emerging nations such as India, China and Brazil were outsourcing providers, manufacturing hubs or providers or raw materials and developed nations such as the US, UK and European countries were centres of finance and IP. The events of 2008 and 2009 have reset this dynamic and created a new world order that nation states must understand in order to deliver success and prosperity to their people.
GLOBAL: THE POST-RECESSION WORLD
Following the events of 2008 and 2009 a new world order is emerging. The failure of Western financial institutions has struck at the very heart of Western nation’s ‘power’. Western nations are struggling to return their GDPs to positive numbers, with the OECD predicting that UK GDP will shrink by 4.7% in 2009 and the US predicting limited growth of between 1.5 – 3% for 2009. At the same time ‘less developed’ countries have undertaken successful stimulus packages, such as China’s $585bn investment, which has caused the Asian Development Bank to upwardly revise its forecast on China’s year-on-year economic growth to 8.2%. The recession has also brought into stark contrast those ‘old world’ nations that have plundered their reserves and are also running huge budget surpluses to dig themselves out of recession, compared to those of the ‘new world’ order who are in surplus and have massive sovereign wealth funds.
The ability of these ‘developing’ nations to bounce back from the global recession faster than their Western counterparts means that there is an opportunity for a fundamental redistribution of economic and political power on the world stage. Countries that have previously been marginalised due to previous bad financial management, war or other contributing factors, now have a rare opportunity to increase their impact on the world stage and in the eyes of citizens of the world. The only question is which countries have the correct strategies in place to seize the opportunity?
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