Last Friday, the world bid farewell to 2021 and welcomed its successor, which comes bearing challenges that will influence the entire globe and impact social behavior and economic growth. Let us shed some light on three key challenges.
First, the correlation between the virtual and real worlds is affecting societies and their behavioral norms, especially following the emergence of the COVID-19 pandemic that gave momentum to the digital world. Technological development has enabled a virtual reality that moved communication from basic digital communication platforms to simulations of real everyday interaction, which gave users the feeling of living in a virtual world.
Therefore, we find that most employees now prefer to work virtually most of the weekdays. This is especially true for ethnic minorities, women, and Gen-Z, according to data from Future Forum. Eventually, this new trend will lead to a shift in the stages of social integration, especially if elementary education becomes mostly virtual. This situation will produce two different environments with different effects, and with time, the educational ecosystem might become entirely virtual.
The second challenge is the conflict between China and the United States. China is the largest trade partner of both first-world and third-world countries. However, in order for the Chinese giant to stay rich and prosperous, it has to compete with the world’s major superpower, and while this conflict will unfold in various forms, the globe is surely not in the mood to witness a revival of the last century’s Cold War. The Sino-US conflict is not only hazardous in political or military terms, but it is rather particularly risky from an economic perspective.
At any rate, I expect that the US will preserve its economic supremacy, regardless of how massive China’s foreign trade becomes and even if Beijing surpasses Washington in this regard. The US has an international system that goes beyond its borders through intercontinental companies with capitalist and competition-oriented principles that are easily compatible with key global economic activities, so much that the US Dollar became the primary international currency.
On the other hand, China has a tight grip over its most influential tech companies and keeps them under state control, to the extent of deciding video-game hours for children and individuals. Accordingly, China has enshrined a state presence that is incapable of producing a free system similar to that of the US, regardless of how far Beijing’s economy grows and how further its companies globally expand.
The third key global challenge of the forthcoming era is energy sources, be they fossil fuel or renewable energy. To start with, fossil fuel needs a massive comeback of oil industry investments. JP Morgan estimates that oil prices should not go below $80 per barrel to guarantee a revival of oil investments that meet global demand until 2030. Things are more complicated with renewable energy, as the IMF expects the global consumption of nickel and cobalt for producing electric batteries to increase four to six fold.
This, in turn, brings forth two challenges; first, large amounts of these two minerals are concentrated in particular countries, and second, the components of chemical batteries are constantly changing and evolving, which concerns investors in the minerals sector on the long run. Hence, some expect that expenditures on renewable energy research might be relatively higher than investments in infrastructure in this relatively new domain, which was not the case with conventional fossil energy sources. At any rate, the supply of energy will remain a challenge that might impede future technical and economic advance.
The response to these three challenges will shape several global strategies, investments, and legislations.
This article was originally published in and translated from Saudi newspaper al-Riyadh.