The global economy looks poised to slow moderately from 3.8 per cent in 2018 to 3.5 per cent next year in Goldman Sachs Research's view, led by deceleration in the US and further softening in China. But with growth still above potential in most developed economies, Goldman Sachs Research expects continued labour market tightening, gradually raising core inflation, and in many cases higher policy rates.
Let us examine some of the burning issues facing the global economy, especially the developing bloc, at this juncture.
Unplanned urbanisation: What a big challenge looming large!!
The world population has risen sevenfold over the last 200 years. For the first time in history, a majority of the world's six billion people are living in cities. Between 2000 and 2025, the world's urban population will double.
French Institute of Demographic Studies projected that by the end of this century there would be 10 to 11 billion people on the planet. The world population will jump from the current 7.1 billion to 9.7 billion by 2050. In India the same is assessed to rise from 1.2 billion to 1.6 billion, while that in China will remain at the same level [1.3 billion].
Urban population is expected to increase by 1.5 billion over the next 20 years, while the number of megacities will double. The UN predicts that by 2015 there will be 358 "million cities" with one million or more people and 27 "mega-cities" with ten million or more. Much of this growth will happen in developing countries. What a big challenge!! India is set to become the world's most populous country by 2050 with a population of nearly 1.6 billion.
Whither food security
Actually we are into a difficult stage globally and nationally in agriculture. Agricultural output will need to double by 2050 to feed a growing world. Produce more; conserve more and improve farmers' lives and that is sustainable agriculture! Given the pattern and trends in land use time is ripe to seriously think over intensive farm practices so that the demand and supply forces get treated simultaneously. The farm sector is still to go a long way before a satisfactory position is arrived at.
Farming feeds the world, which, in turn, depends on vital natural resources and as such we will need to do a lot with the solution nature already provides incessantly - rainwater. The main challenge for farmers is squeezing the most out of unpredictable rainfall, which, in turn, depends on putting the latest science-backed tools in farmers' hands, inclusive of advanced hybrid and bio-tech seeds - the seeds which can increase the yield significantly and can effectively extend a helping hand to the farmers - to use one-third less water per unit produced, as rightly observed by the leading agri-experts.
The challenge remains: how can we squeeze more food from a raindrop in as much as non-irrigated agriculture produces still 60 per cent of the world's food and judging by the ongoing facts and circumstances it will definitely need to do more.
It is high time that sincere collaborative programmes are resumed among the countries in order to adequately address opportunities and challenges. Intensive agriculture has to lead the process keeping in view the intense competition over land, crop-wise [intra-sectoral] and activity-wise [inter-sectoral]. The very recent development definitely raises hopes.
The ongoing situation, thus necessarily, calls for giving a big push to farm investment especially keeping in view the plight of the entire developing nations. Though 60 per cent of South Asian countries are still dependent on this sector, yet the growth rate of this sector in particular leaves much to be desired. In the entire developing bloc this is the reality emanating mainly from inadequate investment, rural infrastructure, research and development and inadequate diversification to high value crops. Side by side : non-availability of quality and cost effective inputs, low efficiency of inputs use and fast deteriorating soil health and water resources remain the critical concerns. Agriculture requires a big push and so as to realise the much coveted high growth rate vis-à-vis food security.
Water and energy security: Waiting for a positive response!
It is crystal clear that population growth would put further strain on per capita availability of water. Efforts to enhance drinking water supply must move at a greater speed so as to cover all of the villages with adequate potable water connection / supply.
Technology, needless to say, would play the bigger role in such a context to meet people's basic needs in a sustained manner. Naturally, protecting fresh water reserves, watershed development, chemical treatments following the safety norms, tackling the arsenic and fluoride contamination, among others, could give rich dividends.
The government has to come up with a new water resource strategy, since the sector needed to become more sustainable, efficient and focused on how water is used and how it reaches people. To ensure economic growth and political stability, the approach to water management must be positive, forward-looking and not myopic! Let there be no water conflicts, conflicts between users and across regions. Water limits are close to being breached in several countries, while food output has to increase by up to 100 per cent by 2050 to sustain a growing world population, according to the United Nations. The World Bank rightly said that key problems in India's water sector included data secrecy, competition for resources, too much focus on increasing supply and not enough on management.
Time is ripe to extensively use lot to holistically manage water and energy usage. Further efforts must be intensified to maximise the use of technology to proactively conserve water and improve performance in water-intensive industries.
Can the business world rise to the occasion?
As the market continues to transform and evolve, businesses (and their outsourcing partners) must anticipate the next steps and consider ways to transform themselves in order to stay relevant and ahead of competition. Over time as organisations develop, what about newer capabilities and strategies to conduct important business processes?
Business processes must become more mature and the Institution must be able to deliver higher performance-hierarchically and functionally. Obviously, to achieve the same the starting point is designing [the comprehensiveness of the specifications as to how the process is to be executed]; followed by the performers [people executing the process based on skill and knowledge]; owner [persons shouldering the responsibility for the process as well as the results]; infrastructure [information/MIS that support the process]; and, of course, the metrics [the measures the company uses to track the process's performance].
Boosting of service quality, keeping in view the very nature of effective demand, is the crying need. The challenge is not only to acquire the customer, but also to retain him in the business for furthering the process of improved customer value. And, of course, the formula for trade-off comes into play in such a vital context. Quality is nothing but a summation of cost and time. Changing any one of these variables would lead to change in the outcome. If the amount of time is shortened to complete the assignment, either the cost is to be increased or quality is to be lowered. Quality refers to identifying the quality standards relevant to the assignment and determining how to measure and satisfy them.
As has rightly been diagnosed - an institution can optimize performance by ensuring that each of the three sides of the performance triangle - corporate culture, the task the individual must perform and the motivation / behavioral make up of their employees - undergoes cautious treading.
It is a pure age of change management and as such businesses in this new era need to focus on appropriate capacity-building measures to equip their employees to handle advanced risk management systems.
Upshot: Problems cannot be eliminated overnight, but systematic, planned approach can do a lot.
Dr Mukhopadhyay is a noted management economist and international commentator on ongoing business and economic trends.