A Global 2020..A Global 2020..

Key Economic Issues and Key Economic Issues and Global Change.. Global Change..

This Week.. This Week..

• Examining some key economic issues for the future.

• The next world superpower.. • Globalisation..• Urbanisation..• What this means for design..

2020 Vision..2020 Vision..

• The emergence of the ‘World Economy’ is happening now!

• The BRIC’s collective.. Who are they?• As well as an economic threat, they are also a

massive opportunity. • We will need to change the way we operate in

business and focus on innovation, skills and value added products and services.

The Next Superpower..?The Next Superpower..?

• China’s economic development over the pasttwo decades has surprised both her critics andsupporters. Since 1978 when China launchedits “Four Modernisations” reform process underthe leadership of Deng Xiaoping, growth hasaveraged 9.5% annually. As a result, China hasclimbed in world rankings to become the sixthlargest economy in terms of nominal grossdomestic product.

The Next Superpower?The Next Superpower?

China has become the focus of much attention. Some parts of business, academia, government and civil society are more highly engaged in China than ever before. China’s future is notmerely of interest for experts. China’s impact on global growth, resource allocation, trade and investment, as well as geopolitical balance has direct consequences for every part of the planet.

China is investing 8bn quote..

Key Questions..Key Questions..

• Can China implement internalreforms to further its development?

• How will China’s relationship withthe rest of the world affect itsdevelopment and shape the globalcontext?

Key Influences..Key Influences..• The intent of China’s leadership and

its ability to sustain the implementation of decisions made

• The economic policy choices made, including the degree of liberalisation and openness

• The extent to which social stability can be maintained and popular expectations managed.

• The reaction of other global actors to China’s rise, and the broader geopolitical situation.

What could go wrong..?What could go wrong..?2006-2010: Governments in Europe and North America,suffering from growing economic demands and domesticpressures, eye China’s impressive economic growth and itsemergence as an increasingly significant actor on the worldstage with increasing concern. A pattern of protectionistbehaviour surfaces, blocking attempts by Chinese corporationsto invest and trade and restricting the free flow of technologyand ideas.

2011-2020: As the global economy slows, severalmultinational corporations sell their manufacturingoperations in China. When exports weaken so does growth,creating social discontent. The Chinese government reactsby creating social safety nets, focusing on the developmentof its domestic market and improving its relationships withneighbours in Asia. Formalisation of these regionalrelationships leads to the establishment of an AsianEconomic Region, allowing the free movement of goods,capital and labour.

The nearly there scenario..The nearly there scenario..

2006-2010: Transition towards a free market economycontinues, but the central government is reluctant to pushthrough too much change for fear of social unrest. In somecases, faced with powerful local vested interests andprevailing corruption of local authorities, it is also unable toenforce reforms. This undermines the country’s economicgrowth.

2011-2020: Global trade and economic integration areshaped by security concerns that hinder knowledge sharing,innovation and labour and capital mobility. China’s internationalcompetitiveness gradually falls and levels of foreign investmentdrop significantly as intellectual property protection andenforcement remain inadequate and innovation is limited.By 2020, China’s economic growth slows significantly,accentuating social unrest.

China’s Ideal Path..China’s Ideal Path..2006-2010: The focus remains on expanding exports,attracting foreign investment and creating jobs to managethe rural-urban transition. The Chinese government is notdistracted by fear of unrest and resolutely stays on the pathof reform. Problems concerning state-owned enterprises(SOEs), the banking sector, the environment and rule of laware all addressed. Moreover, Beijing undertakes directpublic consultation as a means of legitimizing its initiativesand disciplining recalcitrant local barons.

2011-2020: China actively engages with the world.It plays a constructive role by helping with peacekeeping, seeking to reduce the dangers of conflict in Asia, and even taking important steps with the international community to improve climate security and reduce the global environmental footprint of energy use. At the same time, domestic reforms and a growing middle class provide the building blocks to develop the Chinese market. This allows for a measure of social security and resource redistributionwithin the country.

Lets take the nearly there path.. Lets take the nearly there path.. • What would happen?• GDP is the total value of goods and services produced by a

nation.

0

1

2

3

4

5

6

%GDP Growth

Growing, growing, gone?Growing, growing, gone?

• China matches India in percentage growth in domestic product, and is a long way ahead of other more developed nations.

• In the ideal world, if China can negotiate its way through internal social policy, government corruption and also the Geo-political situation it may achieve a 7.5% annual GDP.

• But what will be the problems for China..

Problems for China..Problems for China..

• Regional Barriers.. China is massive and has many remote and disconnected regions with many social difficulties.

• China expansion has been enormous and rapid.. Consuming resources, as it progresses massive investment will be needed, can the Chinese government and the world itself keep up?

• The future economic development of China depends on a strong knowledge economy, based on technology, research and development and foreign investment. Can this all be achieved in such a relatively short time?

Modern China..Modern China..

Modern ChinaModern China

Modern China..Modern China..

What Does this mean for Design?What Does this mean for Design?

• China represents both competition and opportunity – its investing in high level skills and its own design sector heavily. But expertise and experience are currently lacking. The UK has a good opportunity provide high-end, value added design services, and of developing strong partnerships for mutual benefit.

• China’s development and that of the BRIC’s also represents massive new markets for products and services, more opportunity that will sustain the world economy.

• What do we need to do? Become aware of this bigger picture and plan for it. New skills will be needed, design businesses will need to market themselves internationally, new thinking and new processes will need to be implements and strategic planning will be essential!

The Cox Report..The Cox Report..• These issues and others that we will talk about today are discussed in a report for HM Treasury by Sir George Cox (Who was up until recently chairman of the Design Council) and its called ‘The Cox Review’. Its argued that the basis of this report is not solid research, but its certainly current. Published in 2005, it reports on the position of the UK Design Industry relative to its world competitors and outlines the challenges the industry faces to remain as successful as it has been in previous year. • The report has been the stimulus for a lot of work in developing a strategy for future of the design industry in the UK and how it must re-position itself to take advantage of new opportunities emerging from the global economy.

http://www.hm-treasury.gov.uk/independent_reviews/cox_review/coxreview_index.cfm

GlobalisationGlobalisation

Globalisation..Globalisation..A number of definitions abound, but all generally note the increasing convergence of markets, economies, and ways of life across the world. A broad overview definition is that globalisation is the worldwide process of homogenising prices, products, wages, rates of interest and profits. Globalisation relies on three forces for development: the role of human migration, international trade, and rapid movements of capital and integration of financial markets and more rapid and widespread diffusion of technology.A less economic-focused definition from the Encyclopedia Britannica states that globalisation is the "process by which the experience of everyday life ... is becoming standardised around the world."

Get Glocal..Get Glocal..

• industrial globalisation (alias trans nationalization) - rise and expansion of multinational enterprises

• financial globalization - emergence of worldwide financial markets and better access to external financing for corporate, national and subnational borrowers

• political globalization - spread of political sphere of interests to the regions and countries outside the neighborhood of political (state and non-state) actors and the potential formation of a global citizens movement

• informational globalization - increase in information flows between geographically remote locations

• cultural globalisation - growth of cross-cultural contacts • globalism - connection between cultures, nations, and people, it embodies

cultural diffusion, the desire to consume and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture". It is a universal, internationalist impulse that the world is connected.

• globalist - someone who is aware of world issues, enjoys new ideas, and considers themselves global citizens with an open mind to both criticise and agree with others.

You’re already involved..You’re already involved..• Globalisation has become identified with a

number of trends, most of which may have developed or accelerated since World War II. These include the greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement. Some of the trends include the following:

• Greater international cultural exchange, – Spreading of multiculturalism, and better individual

access to cultural diversity (e.g. through the export of Hollywood and Bollywood movies). However, the imported culture can easily supplant the local culture, causing reduction in diversity through hybridization or even assimilation. The most prominent form of this is Westernisation, but Sanitisation of cultures also takes place.

– Greater international travel and tourism – Greater immigration, including illegal immigration

Multiculturalism..Multiculturalism..• The UK is a prominent example of racial

tolerance and understanding.. Our food our lives since the 40’s we have diversified!

Globalisation Characteristics..Globalisation Characteristics..• Spread of local consumer products (e.g., food) to other countries (often

adapted to their culture) Cheap travel, free flow of information• World-wide fads and pop culture such as Pokémon, Sudoku, Numa Numa,

Origami, Idol series, YouTube, and MySpace and Facebook.• Technology – Internet, increase in ownership, high speed, availability,

simplification.• World-wide sporting events such as FIFA World Cup and the Olympic

Games. • Formation or development of a set of universal values • Development of a global telecommunications infrastructure and greater

trans-border data flow, using such technologies as the Internet, communication satellites, submarine fiber optic cable, and wireless telephones

• Increase in the number of standards applied globally; e.g. copyright laws, patents and world trade agreements.

• The push by many advocates for an international criminal court and international justice movements.

Oh My God..Oh My God..

• Countries in the world that have a version of Pop Idol.. Globalisation at its worst??!!

Break Time..Break Time..

Positive and Negative Effects..Positive and Negative Effects..• The term "globalisation" is used to refer to these collective changes as a

process, or else as the cause of turbulent change.

• Economically, socially and ecologically positive: As an engine of commerce; one which brings an increased standard of living to Third World countries and further wealth to First World countries.

• Economically, socially, politically, and ecologically negative: As an engine of "corporate imperialism;" one which tramples over human rights in developing societies, claims to bring prosperity, yet often simply amounts to plundering and profiteering. Negative effects include cultural assimilation via cultural imperialism, the export of artificial wants, and the destruction or inhibition of authentic local and global community, ecology and cultures.

• It is often argued that even terrorism has undergone globalisation, with attacks in foreign countries that have no direct relation with the attackers' own country.

Global Communications..Global Communications..

Positive and Negative Effects..Positive and Negative Effects..• Since World War II, barriers to international trade have been considerably

lowered through international agreements - General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the World Trade Organisation (WTO), for which GATT is the foundation, have included:

• Promotion of free trade – Reduction or elimination of tariffs; construction of free trade zones

with small or no tariffs – Reduced transportation costs, especially from development of

containerisation for ocean shipping. – Reduction or elimination of capital controls – Reduction, elimination, or harmonization of subsidies for local

businesses • Intellectual property restrictions

– Harmonization of intellectual property laws across the majority of nations, with more restrictions.

– Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the United States)

Containerisation..Containerisation..

Roughly how many containers does is this ship carrying?

Why Globalise?Why Globalise?

• Supporters of democratic globalisation are sometimes called pro-globalists. They consider that the first phase of globalisation, which was market-oriented, should be completed by a phase of building global political institutions representing the will of world citizens. The difference with other globalists is that they do not define in advance any ideology to orient this will, which should be left to the free choice of those citizens via a democratic process

• Supporters of free trade point out that economic theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting. In general, this leads to lower prices, more employment and higher output.

• Libertarians and other proponents of capitalism say higher degrees of political and economic freedom in the form of democracy and capitalism in the developed world are both ends in themselves and also produce higher levels of material wealth. They see globalisation as the beneficial spread of liberty and capitalism.

Why globalise?Why globalise?• Critics argue that the anti-globalization movement uses anecdotal evidence to support their

view and that worldwide statistics instead strongly support globalisation:• The percentage of people in developing countries living below US $1 (adjusted for inflation

and purchasing power) per day has halved in only twenty years, although some critics argue that more detailed variables measuring poverty should instead be studied.

• Life expectancy has almost doubled in the developing world since WWII and is starting to close the gap to the developed world where the improvement has been smaller. Infant mortality has decreased in every developing region of the world. Income inequality for the world as a whole is diminishing.

• Democracy has increased dramatically from almost no nation with universal suffrage in 1900 to 62.5% of all nations in 2000.

• The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s.

• Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: Female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000.

• The percentage of children in the labor force has fallen from 24% in 1960 to 10% in 2000. • There are similar increasing trends for electric power, cars, radios, and telephones per capita,

as well as the proportion of the population with access to clean water. Technology leapfrogging is also an issue

You Decide..You Decide..

• What do you think.. Do the benefits out way the cons? • The difficulties in integrating society may mean loosing our

identity or control of some decisions that we make.. • Is this happening already?! • For Designers this means massive collaboration and new

understanding and skills (again) developing new methodologies and responses to new markets, different cultures and global clients.

For Reference..For Reference..

• Thomas L. Friedman. (2006). The World Is Flat, Farrar, Straus and Giroux. ISBN 0-374-29279-5

• Alex MacGillivray. (2006). A Brief History of Globalization: the Untold Story of our Incredible Shrinking Planet, Carroll & Graf. ISBN 0-7867-1710-6

• Manfred Steger. (2003). Globalization: A Very Short Introduction, Oxford University Press. ISBN 0-19-280359-X

• Joseph E. Stiglitz. (2006). Making Globalization Work, New York: W.W. Norton & Company. ISBN 0-393-06122-1

• Joseph E. Stiglitz. (2002). Globalization and Its Discontents, New York: W.W. Norton & Company. ISBN 0-393-32439-7

Urbanisation..Urbanisation..

• Urbanization or urbanisation is the increase over time in the population of cities in relation to the region's rural population. Urbanisation has effects on the ecology of a region and on its economy. Urban sociology also observes that people's psychology and lifestyles change in an urban environment.

Biggest Cities in the WorldBiggest Cities in the World

1. Tokyo - Japan 34.2m2. Mexico City - Mexico 22.8m 3. Seoul - South Korea 22.3m 4. New York – USA 21.9m 5. Sao Paulo - Brazil 20.2m

Tokyo..Tokyo..

Tokyo covers about 5,200 sq. miles, Greater Manchester covers 492 sq. miles. with a population of 2.5 million in comparison to 34.2 in Tokyo!

Urbanisation Rates..Urbanisation Rates..

• For instance, the United States or United Kingdom have a far higher urbanization level than China, India, Swaziland or Nigeria, but a far slower annual urbanization rate, since much less of the population is living in a rural area while in the process of moving to the city. Australia is at the opposite of the former two in terms of urbanization rate but also the latter three in urbanization level, making it one of the most urbanized countries in the world.

• In terms of a place, urbanisation means increased spatial scale and/or density of settlement and/or business and other activities in the area over time. The process could occur either as natural expansion of the existing population (usually not a major factor since urban reproduction tends to be lower than rural), the transformation of peripheral population from rural to urban, incoming migration, or a combination of these.

What changes?What changes?

• The most striking immediate change accompanying urbanisation is the rapid change in the prevailing character of local livelihoods. As agriculture, more traditional local services, and small-scale industry give way to modern industry, urban and related commerce; with the city drawing on the resources of an ever-widening area for its own sustenance.

• Research in urban ecology finds that larger cities provide more specialised goods and services to the local market and surrounding areas, function as a transportation and wholesale hub for smaller places, and accumulate more capital, financial service provision, and an educated labor force, as well as often concentrating administrative functions for the area in which they lie. This relation among places of different sizes is called the urban hierarchy.

• As cities develop, effects can include a dramatic increase in rents, often pricing the local working class out of the market, including such functionaries as employees of the local municipalities.

• Richard Florida’s book ‘The Creative Class’ discusses economic growth and development of urban regions and its relationship to creative people!

New Urbanisation..New Urbanisation..• A movement in Urban Design which started in the late

80's. New Urbanism believes in shifting design focus from the car-centric development of suburbia and the business park, to concentrated pedestrian and transit-centric, walkable, mixed-use communities. New Urbanism is an amalgamation of old-world design patterns, merged with present day demands. It is a backlash to the age of suburban sprawl, which splintered communities, and isolated people from each other, as well as had severe environmental impacts. Concepts for New Urbanism include concentrating people and destinations into dense, vibrant communities, and decreasing dependency on vehicular transportation as the primary mode of transit.

Not So Sci-Fi?Not So Sci-Fi?

Urbanisation..Urbanisation..

• Urbanisation can be planned or organic. Planned urbanization, ie: new town or the garden city movement, is based on an advance plan, which can be prepared for military, aesthetic, economic or urban design reasons. Unplanned (organic) cities are the oldest form of urbanization. Examples can be seen in many ancient cities; although with exploration came the collision of nations, which meant that many invaded cites took on the desired planned characteristics of their occupiers. Many ancient organic cities experienced redevelopment for military and economic purposes, new roads carved through the cities, and new parcels of land were cordoned off serving various planned purposes giving cities distinctive geometry – Rome is an excellent example.

• UN agencies prefer to see urban infrastructure installed before urbanization occurs. landscape planners are responsible for landscape infrastructure (public parks, sustainable urban drainage systems, greenways etc) which can be planned before urbanization takes place, or afterward to revitalized an area and create greater livability within a region.

10 Years Time..10 Years Time..

• Problem is that most UK cities are based on the old system of urbanisation, original roads in the UK are Roman!! (in some cases) our cities are ancient and our infrastructure is poor.

• Modernisation is much more prevalent in Asia as cities are new and they are less Traditionalist.

• Planned urban development is the only way.. Encouraging less unnecessary travel, and vast improvements in public transport services.

• Many more issues!!

What Does This Have To Do With What Does This Have To Do With Designing?Designing?

• Urbanisation means the concentration of services and products in increasingly concentrated area and, therefore, markets.

• Creatives are often centred around vibrant and ever-changing cultures which stimulate new ideas and ways of doing things.

• Not only this; but the process of urbanising will require new solutions and innovative thinking.. With population set to rise and the strain on resources.. We must design or die! Adapting new technologies and systems to become useful to mankind.

Thanks..Thanks..

• Next week• New product development factors..