"10 GLOBAL TRENDS TO WATCH
By Marshall Loeb, CBS.MarketWatch.com
Last Update: 1:00 AM ET Oct. 18, 2001
NEW YORK (CBS.MW) -- In this extraordinary time, what are some major
economic and political trends that we may well confront in the
immediate future?
It's a tough -- and supremely important -- question. For answers, more than 100
top bankers, chief executives, politicians, economists, academics and other
influential people from around that world were interviewed by Robert
Dilenschneider, a leading international public relations executive, and his
colleagues.
Here are some of the trends and challenges they discerned:
Americans will become much more a part of the world. Until now, we have
been fairly isolated in our continent-sized country. One symptom: Only 17
percent of Americans hold U.S. passports. You can expect that number to
grow. Among the many lessons we can take from the tragedy of Sept. 11, the
Dilenschneider survey says, is that Americans can no longer avoid learning
about other cultures or their mores; religious beliefs heretofore foreign to us; or
political structures and personalities that only occasionally appear on the
"foreign news" pages of our newspapers.
Europe will become more aggressive in dealing with the U.S. The
European Union's rejection of the General Electric/Honeywell merger was just
the start. That move emboldened many Europeans who were once resigned to
accept the U.S. as the unquestioned world leader. Beyond the GE situation,
also consider the tough times that Microsoft and Coca-Cola have been
experiencing in the EU, where they have been essentially accused of
noncompetitive practices. Like it or not, even in the wake of Sept. 11, the U.S.
is too often seen as arrogant and uninterested in the rest of the world; as
incredibly rich and using its wealth to dictate to other countries.
The U.S. will concentrate more on strengthening relations with Mexico
and Canada. For reasons of security, look for the U.S. to find ways to deepen
ties with neighbors to the North and South. Mexico, as well as Venezuela and
other Latin American nations, has rich oil deposits and willing labor, and Canada
enjoys treasures of many natural resources.
Trade liberalization will be a new focus of attention. It is the key to 1)
finding a way through troubled economic times, and 2) helping less successful
nations improve their lot. Watch for the World Trade Organization's meeting
November 9 to 13, probably in Singapore. The subjects to be discussed and
decisions to be made by some 142 nations will include environmental controls,
farm subsidies and whether -- and when to admit China to the WTO. That would
open many markets to Beijing, and insiders say it is a done deal.
Amid a world economic recession, one nation remains strong. In this
year's first six months, global industrial production fell at a 6 percent annual
rate. Singapore's gross domestic product tumbled at a rate of 11 percent,
Taiwan's 6 percent. The GDP of The Philippines, Thailand and Malaysia have
also fallen. Japan has major problems (see below). In Europe, Germany's GDP
was flat in the second quarter; Italy's fell. Russia is in dire economic straits. But
China's economy grew an awesome 7.9 percent in this year's first half.
China is rapidly and inevitably becoming a world superpower. Each of
the 14 Chinese dynasties has lasted longer than all of U.S. history, and the
Chinese are prepared to outlast the world when it comes to achieving
dominance. In the first six months of this year, China's industrial production
grew 10.7 percent. Profits from industrial enterprises and state-controlled
businesses rose more than 18 percent.
The Third World will draw more attention. Millions of impoverished people
there present a massive market for the industrial goods that are now a glut on
the developed world's markets. While in the U.S. and Europe there are only one
or two people behind every person computer, in most Third World nations there
may be 50 or 100 behind every PC. In Mexico the number is more than 40, and
in Cambodia it is estimated at 400.
Egypt is the potential tinderbox of the Middle East. The country has long
been a stable factor in the area, but today Egypt's economy is in tatters, and
unemployment is on the rise. Its political structure is challenged; splinter groups
are gaining strength; frustration is mounting among young, educated people; the
fundamentalists are strong and their propaganda is very active despite efforts of
the security apparatus; and the desire of the people for a change that will not be
received happily by the West in high.
Japan will encounter a rocky road back. There seems little light at the end
of the tunnel for the world's second largest economy. More than 40 percent of
Japanese families hold mortgages above the current value of their homes. Many
businesses are in the same position. But Japan's fairly new prime minister,
Junichiro Koizumi, is leading the serious efforts underway to return this nation to
its world-class status. He is calling for deregulation, privatization of the postal
system, revision of the nation's pacifist constitution in order to build up the
military, and selective spending to stimulate the economy. Koizumi, however, is
considered by some to be a strident nationalist who may evoke fears of
resurrecting the concept of Japanese hegemony over Southeast Asia. So,
expect volatility. The bankruptcies and consolidations that have begun will likely
accelerate as the nation continues to dig out of its problems.
A power to watch in the future is Shintaro Ishihara, governor of Tokyo. Ishihara,
who a decade ago co-authored the book "The Japan that Can Say 'No,'" has
called for Japan to cut loose from the U.S. and, together with China, create a
"greater East Asian sphere."
Wealth is becoming increasingly concentrated -- and a problem in some
places. From 1990 to 2000, top U.S. corporate executives' pay rose 571
percent, while the average worker's pay climbed 37 percent (before adjusting for
inflation). CEO pay now stands 531 times what the average production worker
earns. The gap is widening between those in the knowledge-based,
high-value-added activities and those involved in low-value-added activities.
The U.S. is a case apart from Europe because of America's commitment to
economic and social mobility. The University of Michigan, analyzing the
finances of 7,000 American households, found that in just five years, from 1994
to 1999, almost one-third of the poorest moved into higher wealth quartiles, while
a quarter of the richest fell into lower quartiles.
But outside the U.S., the issue of wealth distribution is aggravated by the
communications revolution, which has made it easier for people to compare their
situations with what prevails in more advantaged countries. It clearly
exacerbates the deprivation felt by the "have-nots" and the "have-less." All this
produces a social backlash that is contributing to the anti-globalization
movement, and will become increasingly serious.
Marshall Loeb, former editor of Fortune, Money, and The Columbia Journalism
Review, writes "Your Dollars" exclusively for CBS.MarketWatch.com."
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