DIGITAL TRENDS 2020-30: PART 5 - The Emerging Markets - For the Next 10 Years There are Other Parts of the Planet that Will Rule

In the digital summary of the past decade, we have previously seen how both society as well as the market and the technology have totally changed. In the following article we took the step further, with a deeper trendspotting regarding what consequences we can expect ten years ahead for the first of these areas, the social. Now it's time to do the same in the second area, i.e. how the global markets will develop ten years ahead. Bon voyage ??

How the western world is losing its cojones?

We just come from a decade when Europe lost an enormous amount of its power, and where the United States, in some sort of last-ditch death, dopes to be able to send its closing fighting to the world.

But where everyone who likes facts more than fiction knows what borrowed feathers it is about - where this year's huge $ 1 trillion budget deficit now hits a historic record, with its mindless 4.3% of GDP being the highest since World War II. And where you have growth figures that don't even reach half of the slowest of all Asian countries.

How the world's strongest region has seriously taking on the throne

Instead we just come from the decade when China now has as many companies (119) as the United States (121) among the world's 500 largest companies in terms of revenue, which is just one of all the evidences for how we others now are sitting among the audience while the world's strongest region already taken the stage.

For what we are talking about is the strongest country in the strongest part of the world that, despite representing only 22% of the planet's mainland, has 57% of the world's population. A population that 40 years ago generated 21% of the world's economy but today, with sky-high growth figures, far more than doubled, and with its 47% represent close to half of the world's economy.

How the trend is extrapolated with leverage 10 years ahead

And the trend ahead is even faster than before, faster than ever - probably anywhere - before. Cause after more than eight years of talk, leaders in this, the world's fastest growing economic region with ASEAN (the Association of Southeast Asian Nations) and its partner countries now developing the world's strongest economic bloc.

What it is about is RCEP, ie the proposed free trade agreement between the ten ASEAN member countries and their six partner countries (Australia, Brunei, Cambodia, China, India, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea , Thailand and Vietnam). Together, these 16 countries are estimated to make up about 32 percent of the world's economy with a total GDP of $28 trillion. And it will cover almost half of the world's population, nearly 3.6 billion people.

And while this is happening, is there in the western world anyone who has taken this in? A survey of searches of the word "RCEP" in the world reveals that in the US there are less than 1% searches for "RCEP" compared to e.g. "NAFTA" (and 0.03% of how many times people searched for "Trump"). Of the number of searches for "RCEP" in the world, the US searches ranks 27th - and Europe no better, where none of the four largest countries rank higher than 25.

So what will the United States and Europe do when the world's largest economic region makes an agreement with each other, and will make an already strong region of the world become…. stronger, or rather the strongest in the world? A pact that the United States under the previous president was invited to, but where the "America first" policy now totally isolated today's strongest country in history from today's strongest region.

And how could (!) you even expect any response when, apparently, people have not even realized what is happening? What is so difficult to understand? Or do people simply not want (!) to understand? In a more unscientific review, when talking to my network in Europe and the United States maybe 1 out of 20 actually knows what RCEP (ie when you talk, when you chat the googling goes on lightning speed - I really don't have ignorant friends, but sometimes we can all can be a little uninformed so to speak :-O :D).

The decade when the globally most crucial effects will no more be what happens between competing regions, but within the leading one

And this despite the fact that this is dynamite more explosive than any other (again without any inherent value, with a dynamite that can just as easily damage people as blasting tunnels that help people :D). Because while the entire western world through Trump's (only) contribution has at least caught the eye of the gigantic uneven trade balance between the US and China, the (western) world has by far not understood that it has now gone so far that it is no longer in the balance between east and west the really big changes in the scenario analysis is taking place, but within different parts of the east.

And there, things happen, things that, as a strategist, I am 100% convinced will have a greater impact on how the coming decade will evolve, than the daily Trump tweet, so to speak (which seems to the only thing the stock market and traditional media seem to follow :O). For without India's participation in the RCEP, Japan has no chance whatsoever as a counterbalance to Jinping, and then there is a diminishing probability that the whole bloc will not a complete China-controlled adventure.

So, yes, there will be huge geopolitical imbalance unless India is included, where an already strong China is getting a leverage in its geopolitical power from 20% of global GDP to being able to "represent" 31-32% along with its "vassals". While the RCEP, if Japan in particular (with less crucial backing of Korea and Australia) would gain a strong partner in India, "China's vassals" would not be as predestinated result.

At the same time: Modi has either woken up on the wrong side, or is an extremely superior negotiator. He has nothing (besides short-term internal politics, like the populists in the West) to gain financially from standing outside the RCEP. All attempts to reach a "westernized" bridge (Malaysia, Japan, Philippines, USA ...) have totally flopped. So if one is not to be totally swallowed, then India must continue to battle with China for the leadership in Asia, so that the other important ASEAN countries can continue to be "reasonably" neutral. These have all been comparably good at ducking so far, and in the future it might have been nice if ASEAN expanded to Bangladesh and then not only deepen its agreement with China but at least as much with India, Japan and Korea, but abandoned by Modi they are an extremely light mouthpiece for China to exert pressure on.

The not only strongest economic bloc in the world, but strongest growth... ever

Why worth babbling about? Well, for APAC to represent near half of the world economy, as well as representing nearly ALL growth - organic 5-6% compared to total panic-doped 2% in the US with gigantic budget deficits and equally doped 1.5% in Europe. And while US is pushing the trend towards more isolationism, the world's strongest region with almost half of the world's economy is now instead forming a strong free-trade bloc that will initially correspond to 1/3 of the world's economy, or the whole 32-40% depending on India's participation.

We thus on one side have forces in the former "united" states of america, making sure different social classes, ethnic groups and industries gets more and more polarized within its borders - now on both sides of the politics - as well as making everything they can to isolate themselves from other "states" in the western world - i.e. moving to the extreme of differentiation. On the other side we have a big chunk of quickly growing states in the strongest region in the world, making a move for agreeing on the greatest economic bloc in history - i.e. moving towards the extreme of integration.

And while this latter movement towards merging might seem like a mere move for power, the probability is that it’s not. Instead it is at least as likely that Asian leaders have understood what the western leaders forgot. Because if the latter would have remembered the fundamentals behind its own social sciences, they would have realized that as more uncertain periods and dynamic environments we live in, the more differentiation of society there thus will be and the more mechanisms for integration we need.

With such short memory for the recipe to organizational success, and with such a diametrical strategy for its development going forward, it has been said that "America needs a miracle" to prosper or, even, survive. And even more so when these frightening trends are happening in the land of such deeply spread Christianity, with its original view of human beings as “neither Jew nor Gentile, neither slave nor free, nor is there male and female, for you are all one in Christ Jesus.”

So “help us God”. Especially when the "integration" is happening in an economic bloc with potential 40% of the worlds GDP, while the "differentiation" is taking place in regions like NAFTA, with 18% of global GDP, and a EU marked by brexits and populism with 16% of global GDP. And, just to make sure, where not even the “potential” bloc is comforting, with the whole APAC thus representing 47%, compared to 29% for the entire EMEA (including old rich Europe, populous Africa and oil-rich Middle East), and 24% for the whole of Americas (including cocky USA and all of Latin America), all of which have important developments to do but for the next decade, but none in the vicinity of a market as important.

And in such a world we will be much better off with a RCEP with India than without, so it is important - and if I use my right brain I would be worried, but if I use the left one it is a nobrainer that Modi plays games until the rules of the game are as he wants them ;-) (or, more correctly, if HE uses the left part of his brain : D).

How an already strong region gets its next leverage through digitization

And all this Asian strength means that we can look forward to “the Asian decade” for at least ten years ahead. And that's BEFORE we even start talking about what happens after we digitized 4.3 billion people. Because after that, yes, then there is nothing in the regressing america-first world that can stop this continent from taking total dominion over our planet.

And why should we? That is where everything happens ??

Rufus Lidman, Fil. Lic.

Rufus Lidman is one of the worlds’ top 100 tech influencers with 50.000 followers for input with emerging technology within emerging markets. As such he draws his insights from a broad tech experience with PhD-studies within change processes, 5 books on the subject of digital strategy, background as a serial entrepreneur with 6 ventures and 2-3 ok exits, and honoured to be member of the exclusive group of 0,1% companies that has developed apps with more than 10 million downloads. His latest venture is called AIAR, based in Singapore (with dev in Vietnam and CM in Philippines), reinventing mobile learning for emerging markets in general and emerging Asia in particular.