Where next for the global economy? - ACCA

28 Pages·2010·1.07 MB·English

aCCoUntanCY fUtUreS
Where next
for the global economy?
a view of the world in 2030
The present system of global cooperation is
not working sufficiently. [We need to] look at
all issues on the global agenda in a systemic,
integrated and strategic way. We have to
rethink our values; we are living together in
a global society with many different cultures.
We have to redesign our processes; how do
we deal with the issues and challenges on the
global agenda?
KlAUs schwAB, PresidenT And FOUnder OF
The wOrld ecOnOmic FOrUm, JAnUAry 2010
ABOUT AccA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer
business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding
career in accountancy, finance and management.
Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability.
We believe that accountants bring value to economies at all stages of their development. We seek to develop capacity in the
profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and
we ensure that, through our qualification, we prepare accountants for business. We seek to open up the profession to people of
all backgrounds and remove artificial barriers, innovating our qualifications and their delivery to meet the diverse needs of trainee
professionals and their employers.
We support our 140,000 members and 404,000 students in 170 countries, helping them to develop successful careers in
accounting and business, based on the skills required by employers. We work through a network of 83 offices and centres and
more than 8,000 Approved Employers worldwide, who provide high standards of employee learning and development. Through
our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy
continues to grow in reputation and influence.
22
The global panel of experts
The views expressed in this document are the personal views of the participants and do not
represent the views of their employers or institutions in the employers’ group or holdings.
VerenA chArVeT JOhn deFTeriOs Andrew dilnOT AnTOniO esTrAny y PrOFessOr sAUl esTrin
Managing lawyer, Invesco; Correspondent, CNN Business Principal of St Hugh’s College, gendre Professor of management
former legal counsel at News and presenter/editor of Oxford University; economist; Chairman, Axial Analytics and head of the department
Barclays Wealth; former Marketplace Middle East broadcaster; former director (financial analysis of management, London
principal at Barclays of the Institute for Fiscal outsourcing company); former School of Economics and
Global Investors Studies member of HSBC’s executive Political Science
committees (Argentina and
Americas region)
chin KwAi FATT mArK gOyder TOny hegArTy lOUghlin hicKey miKe hOBdAy
Managing director, Founder director, Chief financial management Global head of tax, KPMG Partner, IBM, and former CEO
PricewaterhouseCoopers, Tomorrow’s Company officer, World Bank of Atos Consulting
Malaysia
JAPheTh KATTO nenAd PAceK PrOFessOr mAUry ABBAs shOJAei mAlcOlm wArd
CEO, Ugandan Capital President, PeiPerl Founding partner, Leadership team,
Markets Authority Global Success Advisors Professor of leadership Salehandishan & Co Grant Thornton UK
and strategic change, and (audit firm), Iran
chairman, business advisory
council, IMD Business
School, Switzerland
wwhheerree nneexxTT FFOOrr TThhee ggllOOBBAAll eeccOOnnOOmmyy?? THE GLOBAL PANEL OF ExPErTS 33
Foreword
This report presents a vision of the world in 2030.
The global economic crisis that started in 2007 continues
to demand short and medium-term solutions from
politicians, business leaders and other opinion formers.
However, in creating new regulatory bodies, commercial
structures and globally coordinated approaches, leaders
must consider the future impact of short-term measures.
While debate continues on the outlook for global
capitalism, we explore the implications of our changing
world and offer a view of the global economy in 2030.
In order to do this, ACCA discussed several hypotheses with a global panel of
experts, asking them how they believe the world might evolve over the next 20
years. The panel includes independent business leaders, economists, academics
and commentators from around the world. Their insights on the future of the
global economy provide new parameters within which we explore the business and
government dynamics that will shape the next two decades.
At ACCA, we work closely with employers – from multinationals to SMEs, governments
and regulators to develop the global accountancy profession. In doing this, we
understand that accountancy can advance only with a deeper understanding of
the direction in which global economic forces will take us. This research study was
conceived to provide this critical context essential to the long-term development of the
profession and demonstrate the value of accountants for business.
Where next for the global economy? is designed to help you navigate today’s
challenges through an understanding of how our actions will shape the world
of tomorrow. We share our panel’s ideas and perspectives to help readers make
decisions based on the collective understanding of those at the forefront of debate. For
ACCA, these perspectives frame the issues that we will investigate more deeply in our
ongoing research.
We would like to thank our panel of global experts, who generously provided their
time, experience and insight for this report. We would also like to emphasise that the
views they express are their own personal opinions and do not necessarily represent
the policy of the organisations in which they work.
Helen Brand
Chief executive, ACCA
4
Contents
The glOBAl ecOnOmy 6
Multi-regional globalisation
ACCA’s perspective
The disTriBUTiOn OF glOBAl POwer 9
The world becomes flatter
Who will dominate the global power-base in 2030?
resOUrces: scArciTy And cOmPeTiTiOn 12
Burgeoning demand
Uncertain supply
The ecological credit crunch – a tax on economic growth
The leapfrog phenomenon
The FUTUre OF FinAnciAl mArKeTs 15
What will global markets look like?
Harmonisation of regulation
Improved access to finance
The cOrPOrATe ecOsysTem 17
A world of shopkeepers – the entrepreneur’s oyster
Fluid, flexible federations of businesses
A changing form of collaboration
gOVernAnce And gOVernmenT 20
Governance and assurance
Towards a system of greater self-governance and responsibility
Shifting sands between the public and private sectors – the role of the state in 2030
mUlTi-regiOnAl glOBAlisATiOn in 2030 24
Five foundations for regional growth and success in 2030
A vision of regional characteristics in 2030
where nexT FOr The glOBAl ecOnOmy? CONTENTS 5
The global economy
Twenty years is both a long and a short time in world politics and history. in 1990, nelson
mandela was released from jail, margaret Thatcher resigned from government, Tim Berners-lee
published a proposal for the world wide web and microsoft launched windows 3. There were
5.3 billion people in the world in 1990, there are now 6.8 billion. By 2050, there could be
more than 9 billion1.
The global economy is now at a tipping Our expert panel was given hypotheses 4 The corporate ecosystem
point; previous interpretations of success, which explore the extent of potential Specialisation continues as
growth and global stature have been change as springboards for discussion. businesses look for cost and scale
based on movement in the Fortune, Panel members shared their personal advantages by placing elements of
FTSE, CAC, DAx and Hang Seng indices, views, which we have interpreted and their value chains in the optimal
tracking multinationals based in a few shaped into five specific areas. locations. An increasingly virtual
dominant countries. This interpretation is network of entrepreneurial businesses
now radically changing to recognise the 1 distribution of global power will seed, connect and collaborate on
regional strengths of diverse and complex A much bigger group of countries now a global scale. We call this a ‘world
markets, family business and a ‘global dominates global debate. Originally of shopkeepers’. This will form a
mittelstand’ of small and medium-sized steered by the G5 – France, Germany, system of specialist SMEs that will
enterprises. These strengths will define Japan, the UK and the US – the resemble more composite, successful
the global economy of the future. global economy was increasingly and culturally adaptable ‘federations
influenced by Belgium, Canada, of businesses’: the multinationals of
Futurology is an uncertain, even Italy, the Netherlands, Sweden and the future.
impossible art, demonstrated by the Switzerland, leading to the G11.
global financial shocks of the past three recognising the impact of developing 5 governance and government
years. Although we cannot predict the economies has led world leaders The future role of governments is
future, we can be better prepared for it. to accept the G20 nations as the defined by an emphasis on either
By presenting possible scenarios for the new global base and embrace an the facilitation of private enterprise
global economy, we gain some clarity ever wider group in global economic or ‘policing the system’. Is there a
around the strategies we need in order to debate, as economic power and coherent middle way suitable for all
steer and prepare for the course ahead. influence spreads. nations, regional groups and the world
economy? rigorous governance and
What might this course look like? 2 resources: scarcity and competition assurance is critical as the globalisation
Broadly speaking, we see a future The competition for natural resources of business continues: new systems
where globalisation will continue and will become more intense. This will emerge to keep the world of
will lead to a world that is ‘flatter’. Our will result in the need for a more shopkeepers on the radar, and
understanding of evolving globalisation coordinated, international approach more principles-based regulation
will be shaped by the strengths that we to accessing and securing sufficient will increase self-governance and
perceive among different regions. At the resources such as oil – the most responsibility within federations
corporate level, we expect to see the important commodity in the past of businesses.
emergence of a ‘world of shopkeepers’ century – but also food, basic and
and new federations of businesses, precious minerals, and water.
with greater collaboration between
people, businesses and markets. This 3 The future of financial markets
collaboration will be supported by Global markets are expected to
increasing regulatory harmonisation and grow but in markedly different ways
convergence. So the future for global depending on regions, resources and
business looks more complex, more partnerships. Financial regulation
fluid and less clear cut. Despite this, will converge across markets as
our panellists viewed the journey we international regulatory cooperation
face with a huge degree of optimism, continues. This will facilitate
based on the individual and collective an increase in the sources and
adaptability of the human race. destination of funds and the volume
and value of global capital flows.
1 United Nations Department of Economic Affairs (Population Division)
6
T
The global economy
Figure 1: range oF poTenTial TransFormaTion our panellisTs Foresee in eaCh area
scAle OF POTenTiAl TrAnsFOrmATiOn
status quo Transformation
1 distribution of global power
2 resources: scarcity and competition
3 Future of financial markets
4 corporate ecosystem
5 governance and government
mUlTi-regiOnAl glOBAlisATiOn We present a selection of our panellists’
Each area above shares a common thoughts about different regions. It is
theme: the ‘Western’ view no longer clear that regions possess key defining
dominates the evolution of global characteristics that they can harness to
markets. Global capitalism is changing shape and secure their future course on
and we need to view the future through a the global stage.
different lens. But how do we do this?
Our hypotheses enable us to explore
new visions and test ideas – some
received, some new – and to enter into
wide debate with a range of experts
from around the world to explore future
directions and consider their likelihood
and impact.
At the tipping point of globalisation we
look at five foundations for growth that
will facilitate regional success in 2030.
where nexT FOr The glOBAl ecOnOmy? THE GLOBAL ECONOMy 7
T
The global economy
AccA’s PersPecTiVe This report contains some staggering enterprises will increasingly spearhead
As the global body for professional figures on population growth and future innovation and creativity and they need
accountants, ACCA is seeing consumption, fuelled by the ambitions every encouragement to thrive. This
significant shifts in economic power and aspirations of a new global middle links very clearly with the key enablers
around the world. class. The twin spectres of dwindling for growth the panel identified, with
natural resources and the impact of entrepreneurial spirit being seen as a
Twenty-two years ago, ACCA became climate change loom large. The extent major contributor to the future success
the first international professional to which these affect society will of national and regional economies.
accountancy body to enter mainland depend on the decisions organisations ACCA has taken a lead in lobbying for
China. Here, ACCA witnessed an and individuals make now. The danger the interests of SMEs with governments,
immense appetite for professional skills is, that by failing to invest in the regulators and standard setters across
in order to support and fuel enormous creation of sustainable business, the the world, helping to position itself as the
economic expansion. Since then, the world risks harming the environment accountancy body most closely affiliated
rise of the BrIC nations and, more irreparably – rendering parts of the to the small business sector. To maintain
recently, the N-11 countries has heralded planet uninhabitable, creating swathes the health of the sector and enable new
a new world order, with established of economic migrants and placing the businesses to prosper in the future,
Western companies competing – and global economy in perpetual peril. re-establishing good access to finance for
collaborating – with an ever-wider small businesses will be critical. For the
and more diverse range of economic ACCA believes that the creation of a larger, more complex global organisation,
entities. Alongside this, the demand for genuine global green-collar economy it is inevitable that regulation will need to
professional accountants trained to a will therefore not only be vital but also be both more hands-on and collaborative
high international standard to support brings with it exciting possibilities for across borders.
burgeoning economies around the world smarter technologies and businesses.
has continued to grow apace. Accountants will have a key role to play ACCA is already championing a
in bringing about a low-carbon world number of themes highlighted by
Through over a century of work in through leading on the disclosure of this report, through its Accountancy
creating finance professionals, ACCA companies’ carbon emissions and the Futures programme of theme-led
knows that talent and ambition reside auditing of these disclosures to quantify research and insights, helping prepare
everywhere and anywhere. And that, and promote the financial consequences the accountancy profession for the
given the right conditions, business can of climate change. immediate and longer-term challenges
flourish in any corner of the world. the future global economy will bring.
As a driver for this, ACCA believes it
ACCA’s long-term mission has been to will be imperative to have a common, www.accaglobal.com/af
support the development of all types internationally accepted carbon
of economies through the supply of accounting standard.
high-calibre professional accountants.
As a result, it has established operations If we accept the premise that there will
in 26 emerging markets around the be a greater number of players in the
world, contributing directly to building international economy, there will be a
financial skills capacity. Through this need for global approaches to regulation
work, ACCA is already witnessing the across the board. But ACCA supports
immense contribution emerging markets the panel’s view that this will be best
are making to the global economy – and achieved through close collaboration
seeing the potential for an even greater between nations, rather than through the
role for these markets in the future. creation of monolithic super-regulators,
operating at a distance from the markets
For this reason, ACCA foresees a future they serve. ACCA believes that regulators
world economy with more parity and need to be local and close to those being
a much wider range of key players, regulated and therefore priority needs to
sharing power and influence around be given to the creation of mechanisms
the world and bringing with it greater which will allow for the sharing of
global prosperity. To underpin this, ACCA knowledge and best practice between
believes it is increasingly necessary national regulators.
to have a single set of high-quality
accounting and auditing standards, With the plethora of business models
facilitating the maximum mobility of and structures we are likely to see
talent and investment. emerging in the next 20 years, ACCA
strongly supports the panel’s view of
As the panel asserts, it is inevitable the need for small, light-touch and
that we will see intense pressure on straightforward regulation, especially for
natural resources in the next 20 years. small businesses. ACCA believes these
8
The distribution of global power
hypothesis in 2030 the world will be ‘flatter’, with an expanded base of financial power. global
power will shift to new emerging markets.
The wOrld BecOmes ‘FlATTer’ learning from each other; ideas,
The world stage is fundamentally capital and ways of doing business will “it’s terribly easy to describe
changing as a result of globalisation increasingly flow between the two. the world economy as though
and the growth of emerging markets. In it’s a war or a race. if it is a
2030, our panel expects these trends to Chin Kwai Fatt, director of race, it’s a peculiar type of race
have led to a ‘flattening’ of the economic PricewaterhouseCoopers, Malaysia, where whoever wins crosses
landscape; many of them predict that says there will be a rebalancing of the the line, turns around and
in 20-years’ time there will be a more world economy as it adjusts to the explains to everyone else how
genuinely global marketplace, where financial crisis by becoming less heavily to win.”
regional barriers to the flow of goods, dependent on the US: ‘If the resulting
services, capital and knowledge will have landscape is such that these emerging Andrew dilnOT, PrinciPAl OF sT
hUgh’s cOllege, OxFOrd UniVersiTy,
been lowered or even dismantled. economies will have a greater role,
ecOnOmisT, BrOAdcAsTer And
there will be a higher degree of mutual FOrmer direcTOr OF The insTiTUTe
Fewer constraints to globalisation will dependence – to the extent that we will FOr FiscAl sTUdies
lead to more competition. yet this is not just be relying on the US domestic
not seen in terms of a battle, or a race. market. Hopefully emerging economies
The panel was united by a feeling of will create new market “clusters”, which
optimism; they see the countries of in turn will promote two-way economic
the world as predominantly sharing in potential between the US and other
its wealth, helping each other along. trading nations. It will therefore become
Thus, it will be less a game of winners a two-way flow, rather than a parallel
and losers and more a case of having universe where goods are shipped to the
all the players on the same team, with US while capital is shifted to the East.’
advanced and emerging economies
Figure 2: World real global gdp groWTh –
annual perCenTage Change2 and real gdp groWTh
in advanCed and emerging eConomies3
world real gdP growth real gdP growth
10 10
Emerging and
8 Trend 8 developing economies
1970–20082
6 6
4 4
2 2
0 0
Advanced
economies
-2 -2
1970 1980 1990 2000 2010
-4
1970 1980 1990 2000 2010
2 IMF World Economic Outlook 2009
3 IMF World Economic Outlook 2009
where nexT FOr The glOBAl ecOnOmy? THE DISTrIBUTION OF GLOBAL POWEr 9
T
The distribution of global power
The driving force of globalisation is 1 A new centre of gravity – emerging
“The business world will be therefore no longer expected to be the markets, primarily in the east
astonished by the rise of new multinational companies of advanced The first scenario envisaged by some
companies from emerging economies. Instead, world growth will panellists is a world where political and
markets at how powerful they be powered by international companies economic power will be inverted and the
will become. They should not based in emerging markets. new centre of gravity will lie in the East,
be underestimated in any way.” particularly in emerging markets, with a
The signs of growing maturity are relative decline of the West.
nenAd PAceK, PresidenT, glOBAl increasingly apparent. The number of
sUccess AdVisOrs
multinational companies from emerging The high-growth scenario of the World
markets in the Fortune Global 500 has Bank predicts GDP growth in emerging
more than tripled over the past decade; markets will continue to outperform
there were 70 in 20084, and emerging that of the developed economies.
“in 2030 the largest economy markets’ share of world trade is growing, Nenad Pacek, president, Global Success
in the world will be the us, the along with their importance in global Advisors, notes that the economic
second largest will probably equity markets. Their 6.5% average fundamentals in emerging Asia, the
be China, followed by Japan GDP growth from 2000 to 20075 has Middle East and key markets in Latin
and germany. There could sparked a large rise in the number of America and Central and Eastern Europe
be a shift but it won’t be a emerging market equity funds that are are notably stronger than those of the
transformation.” promising attractive returns. After the Western European markets, the US or
recovery from the Asian financial crisis Japan. He points to the former’s record
sAUl esTrin, PrOFessOr OF
in the late 1990s, private capital flows accumulated foreign exchange reserves
mAnAgemenT And heAd OF
dePArTmenT OF mAnAgemenT AT to low- and middle-income economies and lower national debt.
lOndOn schOOl OF ecOnOmics And more than quadrupled from $200bn in
POliTicAl science. 2000 to more than $900bn in 20076. In this scenario, the doors would open on
The financial crisis that started in 2007 a new East–East axis of power. Capital
has highlighted this process, throwing flows between emerging markets would
into sharp relief the weaknesses of the continue to increase as these countries
financial structure in some advanced move away from dependence on the
economies and the relative strengths of current developed world and access to
certain emerging markets, particularly in finance improves. This axis of power
terms of debt-capital ratios. would see a reinvigoration of trading
routes stretching from emerging Asia to
We therefore see a new global the Mediterranean via North Africa.
power-base forming. The increased
prominence of the G20 will have John Defterios, correspondent, CNN
recalibrated the stature of emerging Business News and presenter/editor
markets in 20-years’ time. The world in of Marketplace, Middle East, says:
2030 is expected to be characterised by ‘The building of the new silk route and
multiple centres of economic power and the new spice route is a key theme for
numerous financial poles. the future. It runs from North Africa
to the Middle East, to Central Asia, to
whO will dOminATe The glOBAl China and then moves down into South
POwer-BAse in 2030? East Asia. Five years ago there was a
In a flatter world the extent to which reluctance to foster trade between, for
global power will shift can be seen example, China and the Middle East,
in different ways and we offer three but that has changed dramatically. That
possible scenarios for the redistribution is because the return on capital for a
of global power. Middle Eastern sovereign wealth fund
in say Indonesia, Malaysia or China, is
much greater than it would have been in
Germany, France, the UK or the US.’
4 The rise of the emerging market multinational, Accenture 2008
5 World Economic Outlook 2009, World Bank
6 World Bank
10