Throughout history, the key trends impacting economic activity within communities and cities revolved around efficiency. Looking towards the future, the main influences shaping economies are no different. From the automation in production to the utilization of digital assets as a form of currency to advancements in technology, these factors continue to make economic activity more efficient. While efficiency continues to be a priority, humanity has additionally gained a greater consciousness in sustainability. The new rise in sustainable business models and increased awareness of environmental factors have reshaped the future of economic life. Together, these are only some of the key trends that individuals, institutions and governments have noticed in analyzing the future of economies around the world.
1.1 the future of production
Manufacturing is no longer simply about making physical products. Today, shifts in consumer demand, the nature of products, and the economics of production have led to significant changes in the way people create products. Simply put, production is the process of combining several inputs, such as labor and (raw) materials, to create a certain output that is appropriate for consumption. This end-product creates value for customers or end-users. In economic terms, production enables the making of goods humans are willing to pay for. In turn, the goods satisfy their needs. This process keeps the economic system going. Moreover, economic well-being could be measured by the level of satisfaction with goods for customers. 

The production sector, also known as the manufacturing sector, has changed dramatically over the past hundred years.  Still, it remains a highly important factor in both developing and advanced economies. The change this sector has experienced creates opportunities for innovation and brings challenges that need to be overcome. What is important to note is the changing role of manufacturing. For example, in advanced economies, manufacturing does not focus solely on employment and growth anymore; it is also about capturing innovations, increasing productivity, and trade. 

This section will elaborate on this by addressing the key trends that are impacting production, supply chains, and sustainable business models.
1.1.1 key trends: digitalization, cybersecurity, & the environment
Today, advances in technology have procured further innovations, which can contribute to greater efficiency and production productivity. However, looking toward the next era of global growth, companies are continuously innovating systems and products, which will lead to profound changes within the next decade. As a consequence, a variety of stakeholders, industries, and individuals will be influenced. For example, with advances in artificial intelligence (AI) and machine learning (ML), there have been calls for greater regulation and governance concerning consumers’ data privacy. With greater efficiencies within the global supply chain, new opportunities arise for trade and investment. Greater production inherently entails greater use of natural resources and greater attention to sustainability. Together, these have an impact on the human capital and skills necessary to manage production lines and, most importantly, to meet the demands of consumer expectations. Therefore, there are three key trends impacting production throughout the world:

  1. The digitization of the supply chain,
  2. The negative cybersecurity threat posed, and
  3. A greater emphasis on environmental risks.
Together, these trends create a narrative for the future of production.

Firstly, the digitization of the supply chain has long been expected and will continue to shape the efficiencies in production for generations to come. With advanced technologies and new techniques for production coming into fruition, it is expected that manual labor will slowly be replaced by automation. With regard to advanced technologies, AI, and ML have disrupted traditional economic dynamics and the production process, inherently redefining the value chain. In addition, technologies have succeeded in processing unimaginable amounts of data through their employment, providing valuable recommendations to overall decision-making.

+ Elias Sohnle Moreno
By reading this, two questions come to my mind: Could this affect employment significantly? How could this impact economies that are heavily relying on the first and secondary sectors?

Furthermore, throughout the supply chain, greater analytics have not only benefited efficiencies toward the business side of the process but have also allowed greater transparency on behalf of consumers. This transparency has been of great benefit in enriching consumer retention.  With regard to new techniques for production, 3D-printing technologies promise avenues to save costs and promote innovation for a promising future. An interesting example of its use is 3D-printed bridges throughout cities in the Netherlands, Spain, and China. Designers begin by entering basic parameters, such as size and materials, into sophisticated 3D-modeling software, which generates its optimal form. The resulting structural element is produced within a matter of days, on-site, allowing manufacturers to deposit materials only where they need the structure. As a result of using necessary materials, the technology allowed for the production of bridges that are easier to maintain and manufactured with a smaller environmental footprint.  Together, these enhancements of advanced technologies and new techniques for production have hastened the digitization of production and have opened the door to greater analytics, reduced environmental impact, and improved overall productivity.

+ Lara Hemels
The accessibility of 3D printing can also make an incredible impact on the democratization of design. Through 3D printers being available in schools and generally being relatively low-cost, younger generations are much more likely to experiment and participate in thinking about how we interact with our objects. Design is no longer purely in the hands of the 1% but can be completely reimagined through 3D printing.

The second key trend impacting production is the negative cybersecurity threat posed by the digitization of the supply chain. Although advanced technologies promise greater efficiencies in productivity and provide innovative solutions, they come at the cost of the vulnerability of their security by any hacker around the world. In short, a crippling cyberattack that compromises large segments of critical infrastructure and production processes can cost millions, or even billions, of dollars in potential revenue lost.  In the eyes of the hacker, this may be beneficial for sending a message to governments worldwide that their vital infrastructures can be disrupted with the push of a button. A key example of this was in July 2021 when Co-Op Sweden was forced to temporarily close their stores due to a ransomware attack. After one of its suppliers, Visma Esscom, was hit by an IT attack, it affected the operations of the supermarket’s point-of-sale tills and self-service checkouts. Consequently, stores were forced to close and millions of euros in revenue were lost. 

Many manufacturing companies have seen an increase in cyber-related incidents associated with the control systems used to manage industrial operations. Therefore, with the increased implementation of advanced technologies, equally sophisticated cybersecurity standards are necessary. In this high-stakes environment, the solution comes solely through increasing defenses. This means that organizations and companies need to perform cybersecurity maturity assessments, establish a formal cybersecurity governance program, prioritize actions based on risk profiles, and build holistic security.  Furthermore, public and private initiatives need to be designed together to instill greater protection, not only for the manufacturing industry but for society as a whole.

An example of a successful initiative on cyber security was the set of protective measures taken prior to the 2021 Tokyo Olympics. They were able to monitor digital activity in real-time, collect all alerts, and escalate abnormal activity when necessary. In addition, intelligence agencies and cybersecurity experts increased preventive measures, which stopped numerous cyber-related attacks targeting ticketing, scorekeeping, and media broadcasting.  Thus, the security and future of production, hinge on its ability to instill greater security.

Lastly, it is no secret that production, throughout several industrial revolutions, has played a primary role in the effects of climate change. For centuries, economic and social progress has come at the expense of environmental degradation, which endangers the very systems on which our futures and survival are dependent. The United Nations estimates that the global population will reach 9.6 billion in 2050, an equivalent of almost three planets could be required to provide the natural resources needed to sustain current lifestyles.  Furthermore, each year, the effects of climate change have become more severe, whereby the global average temperature now stands at a point about 2°C above where it was fifteen years ago. 

In light of this pattern, governments and multinational companies are beginning to assume more responsibility for responding to these worsening circumstances. Through the Paris Agreement, the establishment of the United Nations (UN) Sustainable Development Goals, and most recently COP26, world leaders have engaged in numerous programs to reduce their emissions footprint and to implement policies aimed at mitigation. As of 2018, over 93% of the world’s 250 largest companies are now reporting on sustainability.  As fossil fuels may have finally peaked, infrastructures have been developed to bring renewable energy into the picture. Since reliance on solar, wind, and other renewable energies are being built into new grids, investment choices are being made with regard to smart roads, battery storage resources, and electric vehicles.  In effect, the establishment of private-public partnerships to combat climate change will be instrumental to not only the future of production but the future of the world as a whole. With generational positive-impact insight, efforts to reduce a company’s carbon footprint and to invest in greater environmental, social, and governance (ESG) initiatives have become a priority.
1.1.2 relevancy, responsibility, and resiliency of supply chains
  1. Automation within the manufacturing line,
  2. Greater investment into advanced technologies such as AI and ML, and
  3. Putting the customer central in making important decisions

Reflecting on the lessons we have learned through the Covid-19 pandemic, the survival of a business is heavily dependent on a company’s supply chain. From meeting a surge in consumer demand to fulfilling environmental and social responsibilities, the resiliency of the supply-chain function has truly been tested in recent years. More importantly, the efficiency of supply-chain technology has become a source of competitive advantage. Looking toward the future of supply-chain management, three advances in technology have become pivotal in testing the relevancy, responsibility, and resiliency of its future.

While advanced technologies have already transformed the way humans work across many organizations and industry verticals due to the restrictions of Covid-19, the future of supply chains rests its hope on automation as the future of logistics. Many businesses are increasingly reliant on automation technologies to operate at a faster pace and in a more efficient way. As a result, Robotic Process Automation (RPA), AI, and other advanced automation tools are allowing businesses to automate complex processes and achieve better business outcomes. This includes a range of tasks, including order processing, invoicing warehousing, etc. through which automation can optimize processing times and operational costs and reduce human errors. 

Furthermore, the developments in autonomous trucks and heightened interest in automation technology and the drastic rise of e-commerce have allowed businesses to transition to a more efficient supply chain. In the United States alone, growth in e-commerce has averaged 15% annually over the past decade with many large logistics companies struggling to fulfill e-commerce orders.  But as volume expands, the solution for resolving these challenges comes in the form of automation. According to McKinsey & Company, the transportation and warehouse industries possess the third-highest automation potential of any sector, having found over fifty technologies that could be used to automate some part of the supply chain.  Looking forward to the future, logistics companies can make more informed decisions, cut costs, and enhance productivity through automation.

For businesses, the Covid-19 pandemic became the driving factor that amplified the need for supply chain organizations to make informed decisions faster and more efficiently. For many, social-distancing measures and delays in the supply chain caused unforeseen shifts in the manufacturing line. To ensure the success of supply-chain management, many companies looked toward AI and advanced analytics capabilities to enable real-time analysis of manufacturing assembly lines, transportation movements, and customer delivery times. It is expected that by 2024, 50% of supply-chain organizations will invest in applications that support AI and advanced analytics capabilities.  These technologies offer a whole host of benefits; from predicting supply-chain risks, remodeling network flows, and empowering business planning processes, analysis of big data can improve core competencies and supply visibility as well as transparency. Nevertheless, companies will prioritize the use of these technologies for greater customer retention.  Investments in advanced analytics, therefore, will be instrumental to a company’s key decision-making capabilities.

Lastly, the influence of automation and greater data analytics has allowed businesses to build a customer-centric supply chain, prioritizing the interests of consumers. Traditionally, when shipments leave a warehouse, consumers do not know the whereabouts of their packages or the status of their shipments. Hence, real-time transportation platforms address this visibility problem, allowing customers to gain a personalized and frictionless experience. Today, successful businesses offer same-day or next-day deliveries, real-time shipping, and easy returns on seamless and interactive platforms.  The future of logistics, nevertheless, will build on this foundation and allow customers to buy into value-added, premium fulfillment services. Hence, the future of supply-chain digitization could greatly benefit from effective supply-chain segmentation strategies, which can help maximize net profitability across a diverse set of segments. Supply chains with knowledge of consumer behavior are the future of consumer experience and will enhance consumer retention.
1.1.3 Creating Sustainable Business Models
In recent years, sustainability has become more and more the new standard for businesses. Nearly every day there is something in the news about a company announcing a new (and more) sustainable strategy or commitment their company will embrace and work on, e.g. to have fewer carbon emissions in the future.  Moreover, millennials and Generation-Zs prefer environmentally friendly decisions and investments from companies, regarding their production processes, among other sustainable practices. As a result, there is more pressure on companies to take responsibility for their ecological footprints , especially since companies publish reports on Corporate Social Responsibility (CSR), which are available and accessible for everyone. In the European Union, for example, the law requires that certain companies, such as banks, insurance companies, and others labeled as public-interest entities by national authorities, must publish information regarding operations and the environmental and social challenges faced.  Companies applying sustainable practices to their production processes, for instance, have gained importance. One reason for this is consumers will look for unique selling points when the product’s market is saturated. 

+ Pieter Hemels
Pressure on these organizations leads to more awareness and commitment: 29 of the top 30 financial institutions have committed to net-zero by 2050. Unfortunately, it might also lead to ‘greenwashing.’ Of these 29 financials, only 11 have short-term targets. None of them has fossil fuel financing policies aligned with IEA/IPCC net-zero scenarios. We don’t need promises but factual behavior if we want to change.
Sources: link, link

A study by BCG found that 40% of consumers are planning on becoming more sustainable in their practices. As a result, implementing a sustainable business model will be of greater importance for companies in the future.  A sustainable business model can be defined as follows: “A business model that creates, delivers, and captures value for all its stakeholders without depleting the natural, economic, and social capital it relies on”.  By implementing a sustainable business model, a company could obtain new sources of value. As a result, a company can maintain or even gain a competitive advantage. 

Because of these reasons, (sustainable) business models will undergo various changes in the future. First of all, business models will be adapted in such a way that they will have a global sustainable impact. Moreover, new digital technologies will be implemented by companies. By doing this, digital technologies will become the connective tissue of global economies; examples include 3D printing and AI, and its implementation will optimize production. 

Another future change will be companies needing to reconsider their operational footprints and evaluate the new risks present in the global economy. This is due to the shifts that will happen in value chains from new technological innovations and the importance of implementing sustainability in the production process, Companies are likely to place their manufacturing plants closer to their consumers in the future. As a result, fewer movements will be made, resulting in lower carbon emissions, etc. 
Already today and even more in the future, incorporating sustainability in the business model is fundamental in doing business. In the future, sustainable investments will accelerate because sustainability will become more central within organizations and their business models. Moreover, companies gain a competitive advantage by being sustainable and production will be optimized by implementing digital technologies. The big question remains, will all these actions help to achieve net-zero emissions for companies?

+ Lara Hemels
I hope businesses will also increasingly consider integrating sustainable models for their employees. When we prioritize sustainable and equitable practices for employees -- like focussing on (mental) health and equal opportunity -- a company's environmental sustainability and health can prosper even further.

1.2 Shifting Towards a Futureproof Consumption Pattern
Climate change and rising inequality are clear signals we need to change our economic system. Recently, social activism has prioritized the topic of sustainability, which has changed consumer behavior and corporate activity. For example, today, consumers expect fundamental changes in the way businesses positively impact the environment and how they adapt their behaviors accordingly. As a consequence, two key trends have arisen; the future of consumption is motivated by a shift toward a positive environmental impact and a consumer-centric approach. These changing consumer needs have only been strengthened by the Covid-19 pandemic, which further emphasized societal problems and initiated a surge in healthy consumer decisions. 

The World Economic Forum foresees a future in which these consumer needs are addressed,  a future in which we can consume responsibly and create value for both business and society. To get there, disruptive business models should emerge that create value in new ways. Future business models could embrace circularity, enable digital engagement, or collaborate with consumers throughout their activities. An example of a socially responsible business is Fairphone, which is a social enterprise aiming to make its entire value chain transparent by producing sustainable smartphones. To achieve this, the company collaborates with industry partners, non-governmental organizations (NGOs), and local governments across the value chain. It raises awareness of malpractice in the industry and works toward a sustainable and fair value chain.  The Fairphone case highlights that collective action is key in achieving systemic change. By working together, firms and governments can speed up the shift toward a futureproof consumption pattern.

Together, it is important to foresee a future of consumption that prioritizes sustainability and users. Consequently, the products and services that we consume on a daily basis will have a minimal negative impact on the environment while promising a significant positive influence for a wide range of consumers.
1.2.1 The Importance of Sustainable Food Systems
The Organisation for Economic Cooperation and Development (OECD) sees opportunities in sustainable consumption but adds some critical side notes to these opportunities.  Food systems are a key area in which consumption might become more sustainable. A trend toward healthier diets could emerge, together with a reduction in overconsumption and food waste. 

Currently, a substantial part of the world consumes too many calories for a healthy diet, potentially causing health-related issues. More sustainable food consumption could tackle these health issues by decreasing the meat and dairy intake in diets (in developed countries). Since meat and dairy production constitute a substantial part of our greenhouse gas (GHG) emissions, a reduction in their intake has positive environmental effects. 

In order to combat the environmental effects of agricultural overproduction, a digital transformation might pose an opportunity for sustainable food systems. The increased access to data that comes with a digital world, increases transparency and traceability in the supply chain. This helps consumers in identifying sustainable products and could reduce waste and losses in the production process.

Nonetheless, the responsibility for sustainable consumption does not have to rest solely on the shoulders of consumers. Supply-side policies may be even more effective, as they could incentivize sustainable consumption by altering the price of unsustainable products. An example is carbon pricing, which would shift consumption away from carbon-intensive products and toward products with a lower environmental footprint. So far, studies comparing firms regulated by the European Union Emissions Trading System to similar firms below the coverage threshold, estimate the carbon price caused relevant firms to reduce their emissions by around 10%.  Furthermore, research on the carbon tax in British Columbia found that a gradual increase in the carbon price reduced emissions by 5% to 15% with negligible effects on the overall provincial economy.  On a national or even a broader level, these price policies could aim at reducing the use of fuel, pesticides, and fertilizers in the production process, for example by decreasing subsidies and tax cuts.

Hence, shifting agricultural overproduction to more sustainable food systems will not only benefit the environment but, more importantly, motivate collective action between public and private stakeholders.
1.2.2 Changes in Consumer Behavior
Consumer behavior is constantly changing. Traditionally, consumers were attracted to physical products, and advertisements on billboards or newspapers would direct one’s attention to them. Today, and in the future, consumers are increasingly influenced by digital marketing tools seen throughout social media and other online platforms. In essence, changes in consumer behavior are driven by a whole host of factors. It could be social life changes or even influential trends within technology; nevertheless, consumer behavior is continuously evolving. When the Covid-19 pandemic struck, it impacted on all sectors of the economy, which consequently forced producers and consumers to live in the so-called new normal. Whereas future trends such as the digitization of the consumer experience and shopping had been predicted, recent events forced society to adopt these trends more quickly than expected. Thus, the future of consumption can be traced to the adoption of digital technologies.

One of the changes currently present in society, which will develop more in the future, is the increase in digital adoption. As a consequence of the Covid-19 pandemic, we saw visible changes in consumer behavior. For example, people were forced to change their lifestyles and adopt social-distancing measures while shifting to digital platforms to fulfill their daily needs: grocery shopping, social interactions, entertainment, etc. Nevertheless, in the future, digital adoption will be even more present and become ever-present for consumers of all ages. An influential trend in the consumer space is the promotion of the metaverse. Known as the future of social interaction, the metaverse is an augmented reality environment whereby users are able to work, shop, and interact with other users from all corners of the globe. It promises a greater overlap of our digital and physical lives in terms of wealth, productivity, and entertainment while blurring the boundaries of interactions online and in real life.  As a result, consumers will gain an immersive experience while shopping. For example, they will be able to rotate, test, and try items of clothing through their digital avatar. Furthermore, in terms of digital advertising, the harnessing of data within the digital sphere provides advertisers with avenues to experiment in immersive ways with building brand recognition.  Customers will not just be able to talk to brands on social media. Now, they’ll be able to interact with them in a 4-D realm. What the future of the metaverse tells us is that geographic locations will become less relevant in the future. As long as there is an Internet connection, people can interact with others, shop online, and work remotely anywhere around the world.

Another change set to keep evolving—and related to the digitalization of shopping in the future—is livestream shopping. This is a new type of online shopping that originated in China more than five years ago. In 2020, it gained popularity in the United States as well. Via Facebook, Instagram, and TikTok, retailers show the newest products they offer to consumers. It can be seen as entertainment for consumers as well. The difference between old-school teleshopping/home-shopping channels and livestream shopping is that consumers can actually interact with the retailers and ask questions about the products they want to buy. Moreover, consumers can buy the products from the same device they’re using to watch the livestream; this makes it easier to actually purchase the product. According to analysts at PingAn securities, the value of goods sold through live streams will double this year to over 313 billion dollars.  Over time, sellers on social media platforms have gained greater consumer trust and are likely to turn over huge volumes of items throughout the next decade.

+ Kim Tan
This is becoming popular and successful in Southeast Asia as well. A lot of Filipinos do this full-time! The average GMV growth in the Philippines in terms of live-selling is 309%, the highest in Southeast Asia. Source: link

Lastly, in the future, the purchasing behavior of consumers is expected to change.

Changes in purchasing behavior have already happened sooner than expected. As a result, increasing trends suggest that consumers will spend their money differently in the future. For example, consumers will shift toward more value-based purchasing, whereby individuals value quality over quantity. Ultimately, consumers will spend less on goods they consider unnecessary and greater importance will be placed on the long-term use of products.  As consumers become more mindful of what they buy, they will make more sustainable choices when buying new products; this is not only about how the products are made, but the possibility of reusing and recycling will also become important.  With all these factors in mind, consumers will become more aware of their actions and the effects that their purchases will have on the environment.

+ Elias Sohnle Moreno
Let's be aware that the increasing demand for sustainable products pushes companies to become more sustainable and "appear" more sustainable; greenwashing—is an interesting discussion together with consumer behavior. Many studies show that although consumers want sustainable products, they are not willing to go to great lengths to find out how sustainable their products are. This provides a strong incentive for companies to highlight one specific sustainable product feature that is often dwarfed by the social/environmental damage to other features of the product produced.

“Nearly 1 in 3 consumers claimed to have stopped purchasing certain brands or products because they had ethical or sustainability-related concerns about them.” - (Deloitte, 2021) 
Therefore, the future of consumption is likely to continue the trend of constant change. Whereas throughout the past few centuries, our consumer experience has been defined by brick-and-mortar stores, the future of consumption will be even more digital, interactive, and sustainable.
1.2.3 Online Retail
One of the key events that we have experienced from being quarantined in our homes is a shift in the way people purchase goods and services. Say goodbye to the days of walking into physical stores, and instead, say hello to buying our groceries, household appliances, or even our favorite pair of shoes within a few clicks of a button on our mobile phones. As more retailers are using technology and cloud-based business models to adapt to evolving competition and consumer behavior, online retail will continue to be defined by its ease of use.

For business, the future of online shopping will optimize the customer experience. Firstly, brands will prioritize seamless experiences to win new customers. Whether people are scrolling through Instagram or searching the depths of a brand website, customers now have access to nearly unlimited products, complemented by customer reviews and even manufacturer information.  Secondly, brands will build creative new digital experiences to unlock the future of retail. Shopping will feel incredibly personalized, and one is likely to see your digital mannequin quickly change outfits, depending on the products you have selected.  Third and lastly, retailers are looking toward the use of virtual reality, artificial reality (AR), and 3D technology to interact with customers. A virtual ‘try-before-you-buy’ experience can be applied to a diverse range of products and across numerous omni channels, including websites, apps, and social media. Imagine testing to see how a new coffee table or couch fits in your living room or a pair of sunglasses on your face; these are customer experiences that are likely to reshape the future of online retail. The consumer is the focus.  Businesses, therefore, are shaping their supply chains and operations for the improvement of the customer experience.

An important aspect of online retail for the future is a greater emphasis on sustainable practices and greater consciousness about our environment. Already, consumers are gravitating to brands that offer fast, free, and sustainable shipping. As seen in Europe, almost one-quarter of consumers would change stores if they did not think that the available products were sustainable. Greater focus on hygiene, organic products, and sustainability have become much more important than ever before in light of the novel Covid-19 pandemic. Furthermore, brands are designing a future customer experience that places people’s social needs, such as feeling a sense of community, at the forefront of their product offerings. For example, Walmart is already changing the marketplace experience by enabling more branding opportunities like lifestyle photography to replace a massive product dump.  With 38% of consumers already intending to shop online and visit stores that provide greater experiences, it is likely that a community-focused approach will be the norm.  More importantly, it cements the future of online retail in our daily lives.

Looking toward the future, greater emphasis will be placed on online retail. Brands are no longer looking to expand their brick-and-mortar stores. Adapting to changes in consumer behavior and greater consciousness of our environment, brands are investing in the online experience. E-commerce is currently at an all-time high. As countries locked down and retailers were forced to close, e-commerce had 10 years of growth in 3 months.  In the future, e-commerce will only grow and improve.

Nevertheless, in recent years, online retail has attracted severe criticism due to excessive forms of pollution. Researchers in the United Kingdom have estimated that shopping at brick-and-mortar stores for frequently bought items results in lower greenhouse emissions than ordering the products online.  This is because shoppers purchase more goods online, which produces more carbon emissions through packaging waste, transportation, warehouse activities, and delivery.  In order to combat the environmental impact of online retail, Walmart and Amazon have provided electric vehicle chargers at more than a hundred of their store locations and have worked with suppliers to reduce emissions from their global supply chain. Amazon CEO Jeff Bezos has also announced a more general plan to fight climate change by making the company carbon neutral by 2040 and meeting the Paris climate agreement ten years early.  Although online retail poses many risks to the environment, the world’s largest retail companies have taken proactive measures to ensure the sustainability of their products and services. Hence, the future of consumption promises benefits for the user and the world.

Thus, looking at the key trends that will impact consumption in the future, it is clear that three stand out. One, sustainability will be at the forefront of important public and private decisions, impacting the food and retail industry. Two, technological advances promise greater efficiency and effectiveness to produce a more engaging consumer experience. Three, in the digital space, the retail industry will prioritize consumers, designing online applications to improve consumer retention.
1.3 Money, Money, M… Cryptocurrency? Financial Developments
Money makes the world go round. And for the world to keep spinning, the finance industry needs to adjust to the world around it. The finance industry is majorly influenced by global developments regarding technology and sustainability concerns. This section discusses some of the main changes in capital markets and cryptocurrencies.
1.3.1 Capital Markets
Many believe that the global capital market began to take on its modern form when the first stock exchange was founded in Antwerp in 1531. Over the past four centuries, the way individuals and institutions trade financial securities has evolved drastically. What will be the upcoming changes?

In capital markets, the supply and demand for money, in the form of savings and investments, come together. The suppliers are generally institutions or people with capital, and they can invest or lend this to those who need it.  Here, there are three visible dynamics:

  1. The increased importance of ESG factors, 
  2. Digitization of financial products and processes,  and
  3. Incorporation of new risks. 
The incorporation of ESG factors includes a wide range of possible company policies and stretches from climate change response to ethical labor standards and dealing with, for instance, data and privacy management. For capital suppliers, ESG is increasingly an important measure by which to evaluate companies. The idea is that companies that have more developed ESG policies are better prepared for the future, and thus are a safer investment.  Not only does this mean that sustainability considerations are more and more present, but there are also more funding options available for companies who do wish to invest in their ESG. A 2020 report shows that while only 37% of banks in 2019 considered climate change increasingly as an emerging risk, in 2020 it was up to 52%.  Additionally, European Union (EU) regulation has made it mandatory for companies with over 500 employees to disclose how they manage social and environmental challenges.  Moreover, in research conducted by the NYU Stern Center for Sustainable Business, it was concluded that implementing more sustainable practices will often increase financial performance. Furthermore, a positive correlation between ESG and financial performance was found in 58% of the studies they reviewed.  The current developments show that actors within the capital market have the chance to influence as well as benefit from incorporating sustainable initiatives. 

+ Chadia Mouhdi
This is very interesting. In today's day and age, a 'small' company with few employees can generate significant revenue and have a lot of impact and influence. Surprisingly, such companies are not mandated by law on how they address social and environmental challenges. So, I think that company size ≠ (potential) influences or impacts.

Given that the capital market is very much based on data, it might not come as a surprise that there are great opportunities for digitizing it. So far, the degree of digitization of the capital market has been relatively low in comparison to other financial services, which, as a whole industry, trails behind consumer goods and retail businesses. New technologies such as AI, ML, and automation can contribute to improving efficiency, reducing costs, and generating greater benefits for their customers.  Still, banks are struggling with finding the correct strategy to digitize their processes, and they often lose themselves in the web of different IT solutions. McKinsey & Company concluded that there are two successful approaches to the digitization of banks. First, banks can opt for the all-in approach: banks fully embrace digital technologies, apply them to their value chains, and adapt their business models accordingly. This method is, however, only suitable for banks with a successful track record in electronic trading. Second, banks can choose a targeted approach: they focus their digital investments on reducing operating costs and protecting client franchises. In this way, they avoid unproven technologies and keep their business models.  Moreover, digitization and the reduction of costs allow for the democratization of public markets, which allows more actors to invest and borrow money. 

All of these developments are not without additional risks, though. As a result of the Covid-19 pandemic, technological developments have massively accelerated. These bring about new questions and issues for cybersecurity, and unintended consequences; for instance, AI technology or risks associated with migration to cloud systems.  Moreover, the democratization of public markets allows more players to participate, and as new wealth opportunities are created, additional risks are created.  Furthermore, the implementation of ESG is related to reducing risks. Failing to act on climate change, for example, can reduce global economic output by $23 trillion (more than one thousand times the U.S.’s current gross domestic product (GDP)) annually by 2050.  All of this has re-awakened the role of Chief Risk Officer (CRO) in many companies; a job almost forgotten but now in charge of figuring out how to govern such new risks.  The multinational EY polled CROs on what they expected their jobs to focus on in the coming years. 88% expected to focus on the implementation of process automation, 66% on the modernization of core IT functions, and 64% on the use of analytics to further customer insights.  CROs will have to deal with many new technologies, among which are cryptocurrencies. 
1.3.2 The Rise of Cryptocurrencies
The rise of cryptocurrency has led to fundamental disruptions in the global financial system. Since the creation of Bitcoin in 2009, this new type of money, secured by cryptography, has rapidly gained popularity worldwide. Thousands of different cryptocurrencies have been launched, adopted, and traded over the past decade. From diverse payment options in our everyday lives to the evolution of banking regulations, cryptocurrency is reshaping the global financial landscape.

At the individual level, cryptocurrency brings efficiency and lowers transaction costs because of the way it works; a central or government authority is not needed in the transaction process as most cryptocurrencies work on decentralized networks. The use of blockchain technology also allows online secure payments or so-called tokens. Those features give cryptocurrency more flexibility as a medium of exchange across the world compared with fiat money and commodity money. Cryptocurrencies make it easier to transfer funds directly between two parties, without the participation of traditional financial institutions. 

Given this, some argue that cryptocurrency could promote financial inclusion on a global scale by providing banking for the unprivileged. Cryptocurrency creates the opportunity for the “unbanked,” who have no access to any form of banking infrastructure, to establish their credit.  This also explains why cryptocurrency gained popularity rapidly in some developing economies such as Kenya, Nigeria, Vietnam, and Venezuela. A Chainalysis, ​​a blockchain data platform, report cites the reasons behind the high crypto adoption in emerging markets as follows: many residents buy a cryptocurrency and carry out international transactions for individual remittances on peer-to-peer (P2P) platforms because they do not have access to centralized exchanges. Apart from being a medium of exchange, cryptocurrency is considered a good store of value in some countries where the local financial system is on the verge of collapse. In the case of Venezuela, cryptocurrency is mainly used as a tool to protect wages from inflation and manage cash flows more efficiently. 

At a governmental level, the high level of uncertainty and volatility in the cryptocurrency environment has brought about significant challenges for financial regulators. Given the anonymity and portability of cryptocurrencies, there has been increasing concern among regulators about the illicit use of cryptocurrencies, such as money laundering and terrorist financing. In addition, the emergence of decentralized finance (DeFi) and crypto payments has raised questions about the ability of financial regulatory authorities to ensure consumer protection, as the use of cryptocurrencies often does not fit into existing regulatory frameworks. 

In response to the crypto boom, central banks around the world have taken policy actions. Some countries are open to the possibility of accepting cryptocurrency as legal tender , while authorities of some economies, such as China and India, are preparing to ban private cryptocurrencies and allow central banks to launch official digital money, so-called central bank digital currency (CBDC). 

Looking ahead, the upward trend in the crypto industry is expected to continue for years. A report published by Allied Market Research estimated that the global cryptocurrency market will reach $4.94 billion by 2030, more than triple its estimated size of $1.49 billion in 2020, with a projected compound annual growth rate of 12.8% between 2021 and 2030.  Although no one can precisely predict what our financial world will look like in the distant future, it is getting harder to imagine a future without cryptocurrencies.
1.4 The Global Economy - Trade & Interdependence
Historians believe that the first long-distance trade happened between the Indus Valley in Pakistan and Mesopotamia, around 3000 B.C.  This means that the idea of trade, or even international trade, is in itself nothing new. That does not, however, not mean that trade is static or never changes. International trade does not exist in isolation. The interests of the parties involved change; the economic settings develop, and political interests can overshadow economic considerations. For this reason, it is valuable to understand how political interests and economic concerns interplay, and that is what global (or international) political economy focuses on. In this section, the following topics are discussed:
  1. International trade and global value chains
  2. Trade policies
1.4.1 International Trade & Global Value Chains
Chances are that if you check the country-of-origin label of the five products closest to you, none of these products will have been made in the country in which you currently reside. This is only a small indication of how much our daily lives are influenced by international trade. When analyzing international trade, the main actors are the countries that exchange goods, services, and money. There is disagreement as to why countries truly participate in trade, but the neoclassical economic idea persists: the parties involved are better off when they exchange their products or services, instead of having to provide all they need by themselves. When other countries can produce a specific product cheaper, it can be beneficial for a different country to just buy their products instead of having to produce the goods themselves.  Without opening up the debate as to whether trade truly benefits countries or for which reason countries specifically choose to participate in trade (for this you are recommended to read up on Adam Smith, David Ricardo, or Eli Heckscher and Bertil Ohlin once you finish this book), it cannot be denied that most countries in the world participate in trade. Even North Korea, one of the most isolated countries in the world, participates, although little, in international trade.  

In recent decades, there has been a general trend toward ever-closer economic cooperation. This is important since currently there are many overlapping agreements. The graph named ‘The Spaghetti Bowl Effect’ shows what is known as the Spaghetti Bowl Effect. This shows the complicated nature of overlapping agreements. The map is not intended to be read easily, but more as an indication of how difficult it is to understand all the different regulations in place. The sheer number and the different types of overlapping agreements will continue to add to the complexity of trade regulations in which states and companies have to navigate themselves. 
the spaghetti bowl effect 
Furthermore, the Covid-19 pandemic has also brought about fundamental questions about dependence on international trade. Worries have arisen about whether it is actually smart to depend on other countries for products, and especially products of incredible importance/sensitivity, such as, for instance, those needed for health care. An example of this is Taiwan’s government, which has for decades discouraged the production of relatively cheap products like medical face masks and instead opted for buying them from China. With the Covid-19 pandemic, the Taiwanese government decided that face masks should be produced in Taiwan again. Not only did the economic value (due to the increased global demand) stimulate the policy change, but it was also the awareness that some products are simply too important to be dependent on their availability internationally.  Additionally, Covid-19 also meant that, since part of the world was in lockdown, international supply chains came to a standstill and created massive delays in the delivery of products.

Such concerns are related to Global Value Chains (GVCs) and international interdependence. GVCs are defined by Pol Antràs, professor of economics at Harvard University, as consisting of “a series of stages involved in producing a product or service that is sold to consumers, with each stage adding value and with at least two stages being produced in different countries.”  This means that in order to finish one product, different states are involved. This might make the production process cheaper, but it also adds certain complexities for both states and companies. Multiple trends are noticeable when analyzing the future of GVCs. 

There is increased awareness that national economies are vulnerable to shocks that take place somewhere in the value chain. The blockage of the Suez Canal in March 2021 is one such example, and it reminded the world that 12% of global trade passes through this single canal, which is about $3 billion to $9 billion worth of cargo passing through on a single day.  For comparison, Mauritania’s annual GDP is $8.2 billion.  The overall cost of the Suez blockage is difficult to estimate, but it is believed that it held up $9.6 billion of trade each day. This is equivalent to $400 million and 3.3 million tons of cargo an hour, or $6.7 million a minute. 

Additionally, the Covid-19 pandemic has also increased awareness about trade vulnerabilities. Since different countries have different Covid-19 and quarantine regulations, production processes are often slowed down by a Covid-19 wave somewhere along the GVC.  Similarly, the pandemic has contributed to the current shortage of containers in most parts of the world. As a result of the lockdowns, not only did international shipping halt but the processes of collecting the containers stopped too. With parts of the world opening up again, the demand for containers is once again on the rise, which has drastically increased the cost of container shipping.  Moreover, the impact of Covid-19 on international trade is expected to have a lasting impact. Covid-19 is not yet over, and other pandemics could occur in the future, so companies and government policies are working to mitigate such risks. This includes, for instance, less reliance on labor (i.e., automation), holding larger inventories, and diversifying or reshoring production processes in order to be less affected by international disruptions.  

Furthermore, the development of new technologies influences the way actors interact with each other in GVCs. One such technological advancement is robotization. It is expected that the use of robotics in production processes will increase the importance of capital and replace repetitive labor-intensive work. This could result in a change of where and who produces what. Countries with much capital and advanced technology and R&D are expected to benefit from this change. Therefore, currently, there appears to be a tendency for countries (e.g., China) to join the race for robotics and AI, as to be among those benefiting from the robotization of GVCs.  In addition, the development of new digital platforms, data-processing advances, and logistics technologies will continue to lower cross-border transaction costs. According to McKinsey & Company, the use of new logistics technologies can reduce the time needed for shipping and customs by 16% to 28%.  This means that technological advancements can have a big impact on international trade.
1.4.2 Trade Policies
Countries introduce trade policies to enhance the benefits they gain from participating in international trade and decrease how vulnerable their populations are to exploitation and economic developments from abroad. Here, two important developments are noticeable:

  1. Countries are actively employing trade policies, including protectionism, and
  2. The weaponization of trade.

+ Emma Datema
For those interested in understanding more about free markets, capitalism, and development economics, I truly recommend Ha-Joon Chang's "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism". Critical and informative, this book sheds much-needed light on how many developed countries became rich from closing their economies off during phases of development but demand openness from countries labeled as currently developing. Furthermore, it discusses the role of IMF and World Bank regulations and how often the conditions imposed on countries have the exact opposite effect of what the loans, policies, and conditions were supposedly intended to achieve.

With globalization and international trade, not all actors who are involved are winners.  Specific industries might suffer when countries have their borders open for imports.  The value of international trade is not in the quantity but more in the type of products (quality) that a country imports or exports. Completed products are much more valuable than mere resources just taken from the ground. The true profit in trade can be found in the value that a country can add to the production process, and this means that knowledge, R&D, and data-intense production allow countries to add much more value, and thus benefit from trade.  

Governments, therefore, have an interest in influencing which industries are developed and not leaving this completely up to market forces. There is a special interest here in strategic markets, which are important for countries since they are key for the continued economic growth of the country. An example of such a market is the technological sector, and, specifically, that of semiconductors. The current global shortage in semiconductors makes essentially all GVCs much more timely and costly. Products from cars to anything technological rely on the availability of semiconductors, and countries have become aware of ensuring they have access to semiconductors.  Governments are increasingly implementing protectionist policies to ensure their technological innovations. By employing protectionist policies, countries try to use restrictions such as tariffs to boost their own industries.  This means they are trying to ensure an advantageous economic advantage in their access to technological developments and limit other countries from buying that knowledge and technology from them. How governments use such industries and trade policies to their competitive advantage also relates to the trend discussed a little further below: that of the weaponization of trade.

Additionally, there are governments who instead opt for a strategy known as Import Substitution Industrialization (ISI). ISI is focused on reducing the dependence of a country on imports, and thus aims to develop domestic markets so as to produce products that would otherwise be imported.  This policy was very popular in the 1950s to 1970s, especially in Latin America and East Asia. Nowadays, African countries are increasingly voicing their discontent with their economic dependence on China and European countries. Increasingly, African economic policies are implemented so as to move away from agriculture and move more toward manufacturing and services.  This also ties in with the trend seen in international trade, that countries and companies want to be less dependent on one another. 

Since 2018, the China–U.S. Trade War is an example of how protectionism and awareness of the dependency on imports from other countries come together. Under instruction from former U.S. President Donald Trump, the U.S. introduced a wide range of products from China, making these more expensive and less appealing to U.S. customers. This was done in order to reduce what Trump perceived as the dependence of the U.S. on China.  Additionally, this trade war can also be seen as the prime example of the second trend: the weaponization of trade. Countries are aware of their interdependence on trade. However, certain trade sectors can be, when effectively used, turned into a weapon that can severely damage another nation’s economy. For this reason, senior advisor of the Center of Strategic & International Studies, William Alan Reinsch, defines the weaponization of trade as “using trade as a tool of foreign policy rather than as an economic goal in and of itself.” 

The weaponization of trade can take place by introducing sanctions (which prohibits parties from country A from selling and/or buying specific products from country B) or tariffs (which make products from country B more expensive and thus less appealing to customers from country A). According to Reinsch, there are two future trends visible with regard to the weaponization of trade:

  1. The particularization of sanctions means that a sending country (those implementing the sanction) can target very specific industries of the receiving country (those that are attacked).
  2. The weaponization of trade is taken to new heights, meaning that countries are becoming extreme in their reasons for introducing trade restrictions, as well as using much more extreme policies.
These will result in the erosion of the trade principles created globally after the World Wars, and it means that countries will interact differently in economic terms with one another. Such an example is already visible nowadays: when Australia demanded an independent international analysis of the origins of Covid-19, China responded with trade restrictions and prohibited the import of Australian coal.  Additionally, this also means that countries and international institutions are looking for different ways to protect themselves against such economic attacks. The EU announced that it has plans to create a new trade defense tool to counter economic coercion by third parties.  Such current policies and plans to expand the weaponry of economic tools show that the weaponization of trade will increase in the future.
1.5 The Labor Market
Many graduating young professionals experience anxiety concerning job security and the opportunity to pursue one’s passion. Looking toward the future, many have continued to doubt the security of their careers as the characteristics of our labor market are constantly changing. From the occupational stereotype of an office desk and hours of wearing uncomfortable suits, the future of the labor market expands the confines of the office to the digital sphere, distinguished by greater flexibility and connectivity. Say goodbye to being stuck in traffic at the break of dawn and hello to online virtual meetings, technological innovations, and a more diverse workforce. The future of our labor market holds promise for more opportunities than ever before.
1.5.1 The Future of Work
Covid-19 has provided an insight into the future of work. Many have lost their jobs while others are rapidly adjusting to working from home as their offices are closed. For a long time, the confines of an office defined how we conducted our occupations. However, our perception of work is quickly being redefined from the traditional nine-to-five and into a profession with greater flexibility and opportunities within the digital sphere. Hence, the future of work will simply not be the same. Key forces of change in technological developments will influence the demand for professionals and how we interact within society. Nevertheless, the implications for individuals and companies are clear: to keep pace with technological advancements, upskilling and training are necessary for complementing the future of work with machines.  Together, they will play an influential role in improving organizational decision-making, increasing supply-chain efficiency, and promoting productivity.

The key forces of change are highly influenced by technological advancements. The emergence of digitalization and AI along with Covid-19 has hastened technological adoption, especially in work areas with high physical proximity.  For a long time, AI technology has been recognized for its data analysis potential due to its superior quantitative, computational, and analytical capabilities.  In the future, AI is likely to play an essential role within the digital value chain as it matches skills to employers, capital to investors, and consumers to suppliers. In relation to organizational decision-making, AI can help process, analyze, and evaluate large amounts of data, which will then be used to understand the key strengths and weaknesses of the business. Within the office, AI promises a significant impact for businesses identifying the talent they need.  Alone, AI promises significant changes in the way businesses make important decisions, in the talent that they attract, and in the automation of specific tasks.

In terms of our day-to-day lives, the confines of the office will likely expand to our homes. Remote work and virtual meetings are likely to continue and be a common practice for multinational companies. Meanwhile, the availability of certain jobs is likely to change as well. Workers in food services, customer sales, service roles, as well as less-skilled office support roles are likely to see their jobs disappear. As a result of automation, middle-wage occupations in manufacturing and some office work face the same reality.  On the other hand, demand for workers in healthcare-related occupations will continue to grow, with increased attention to health, rising population age, and availability of new technologies.  According to current trends, managers and business and legal professionals are likely to stay. This underlines a future trend that we are likely to see: as compared to before the Covid-19 pandemic, as many as 25% more workers may need to switch occupations.  Given these facts, it is apparent that the concentration of job growth in more skilled occupations, retraining, and upskilling are necessary to complement the future of work with machines.

+ Anne Clerx
The Covid-19 pandemic has probably greatly accelerated this development. I wonder if we would have ever reached the current remote work and virtual meetings levels if the pandemic had not existed.

Lastly, the nine-to-five job will likely be eliminated as companies and professionals seek out greater meaning and relevance in what they do. Traditionally, society has grown used to a fixed occupational identity where a person’s occupation defines who they are. This is illustrated best by the ubiquitous question, “What do you do for work?” For many, occupations are temporary, not permanent. Research suggests that people work in over ten or more jobs across multiple industries across their lifetimes.  Hence, how can individuals define themselves by what they do if they are continuously switching jobs? As a result, in recent years, greater emphasis has been placed on young professionals to connect to the motivation that comes from purpose. More importantly, many continue to search for occupations through which they can build on their creativity and identify their passions. Hence, many firms have started to communicate corporate purpose and values effectively. By building and maintaining trust with employees and society as a whole, corporate purpose/values have become a fundamental requirement for many companies.  Furthermore, purpose-driven businesses are not only able to bring purpose to their employees but also distinguish themselves from competitors with improved consumer retention and engagement. For example, Unilever’s twenty-eight “sustainable living” brands (which focused on reducing the brand’s environmental footprint and increasing social impact) delivered 75% of the company’s growth and grew 69% faster on average than the rest of its business in 2018.  Thus, in stating future trends for the future of work, it is important to highlight the effectiveness of purpose as a core differentiator and the power in passion.

+ Camera Ford
This is very interesting research! It brings to mind Rob Hopkins’ book “From what is to what if: unleashing the power of imagination to create the future we want.” Hopkins’ message is that society needs to rekindle its collective imagination to build a better future. Around the world, people and communities are tapping into the power of imagination and free play as a way to connect back to the natural world and nurture collective health and mental freedom. I can imagine that this desire to be creative and identify passions and professional purpose stems from a similar urge to feel more alignment in one’s work life. The shifting landscape of the work world could give opportunities to place more emphasis back on developing intuition and imagination at all stages of life rather than forcing people to mold themselves to fit whatever a restrictive job market requires of them.

+ Pieter Hemels
Recently, ftrprf did an intensive study on 'work in 2030' in the Netherlands (when you read Dutch and want to have the survey, send a mail to, and we'll make sure you get the 200-page book). Interpreting 20 big influencers of work in the coming decade (like 'aging,' 'flexibilization,' 'social security,' and 'opportunities equality'), we developed four scenarios on the future of work, defined by two significant uncertainties: the access to welfare & the impact of technology. The way we organize these two (individually or collectively, focusing on efficiency or participation) will have a tremendous effect on the way of working and society as a whole. Source: link

+ Line Gammelgaard Jensen
It is one thing to communicate about purpose and values; it is another thing to actually act it out and make it part of the entire company/organization. From past experiences, I've seen a disconnect between the two.

As Covid-19 continues to affect our daily lives, the future of work is expected to redefine the traditional nine-to-five job to an occupation with flexibility, innovation, and purpose. Despite a high degree of uncertainty, one thing can be promised: the future of work is likely to be different than ever before.

+ Line Gammelgaard Jensen
As our work moves more and more from the office to our homes, it brings new challenges to work-life balance. It can be difficult to really switch off work when working from home, and, therefore, the workday often becomes much longer. On the other hand, working from home also brings more freedom to your day and allows you to plan much better. However, it is something to be mindful of.

1.5.2 Emerging and Declining Skills & Jobs
In predicting the next decade, the advancement of technology is expected to be instrumental in the emergence and decline of certain skills and jobs. The resulting set of emerging professions will reflect the adoption of new technologies and increasing demand for innovative productions and services. Employers expect that low-skilled jobs will decline (from 15.4% to 9%) while the adoption of emerging professionals will drive greater demand for green-economy jobs and roles in engineering, cloud computing, and product development (from 7.8% to 13.5%).  As a result, the long-term trends from advanced technologies will have a significant impact on labor markets. More importantly, an opportunity to plan and strategize toward a better future for work will unfold.

The threat of these declining jobs comes in the form of the replacement of human labor with machines. Research suggests that by 2025, over 85 million jobs may be displaced by a shift in the division of labor between humans and machines.  With regard to professions, it is likely that new technologies will displace jobs with recurring tasks. This includes data entry clerks, administrative and executive secretaries, accounting and bookkeeping and payroll clerks, accountant and auditors, assembly and factory workers, as well as business services and administrative managers.  This is important to note as the reallocation of autonomous tasks from humans to machines is already in motion. Consequently, developing and enhancing human skills and capabilities will be key drivers in occupational retention and development.

In light of future developments, the emergence and retention of jobs come in the form of soft skills and occupations in technological development. In recent years, growing demand has been demonstrated for certain jobs in the technology industry, including data analysts and AI and ML specialists. Nevertheless, the importance of soft skills and human interaction is best demonstrated in the care economy. Here, employers will emphasize key characteristics such as care, critical thinking, and problem-solving skills.  Together, they show that roles with a certain aptitude for innovation and human interaction will be critical to their occupational relevancy.

To overcome the effects of technological displacement, governments and organizations need to invest in upskilling opportunities and provide greater avenues for job transition. On average, research suggests that 40% of workers will require reskilling for six months or less.  Nevertheless, through focused efforts, these individuals could acquire and master essential skills to excel within a new industry.  In light of our transition to the future, leaders should encourage life-long learning and allow their employees to demonstrate their potential.
1.5.3 Work and Demographics
Looking ahead, the demographic of participants in the labor market is likely to shift. With increasing trends toward an aging workforce, technological demand, and international migration, it is important to note that the range of goods and services currently available will be tailored to the changing needs of society. Nevertheless, such rapid advancements mean that there will likely be jobs and careers available for you and your children that have not yet been considered but that offer real opportunities for everyone in the future.

By 2030, it is estimated that there will be at least 300 million more people aged sixty-five and older than there were in 2014. As people age, their spending patterns shift with a more pronounced increase in spending on healthcare and other personal services. Consequently, this is likely to create new demand for a range of healthcare-related occupations, including doctors, nurses, and personal care aides. Additionally, this will put increased financial pressure on old-age support systems. In countries where public transfers are high, including many in Europe and Latin America, aging populations will increase the fiscal pressure on public transfer systems, especially if patterns of taxation and benefits remain unchanged. In countries where public transfers are relatively low, such as many in Southern Asia and South-Eastern Asia, individuals and families face greater pressure to finance their consumption during old age. Therefore, in order to maximize the benefits and manage the risks associated with population aging, governments have shifted their investment toward greater health care access for all. 

+ Pieter Hemels
What often remains underexposed in the discussion about a rapidly aging society is that in the coming decade, there will be three movements co-occurring in Europe:

1. The number of retirees is rising fast
2. The number of workers between the ages of 45 and 65 is decreasing and
3. The number of workers between the ages of 25 and 65 is increasing rapidly.

The latter point is at least as relevant as the first point. In 2030, most of the working population will consist of generations Y & Z, generations far more concerned than their parents and grandparents with sustainability and the future of the planet. They also actively look for purpose in their work and are very aware of the scarcity of labor and, therefore, their value. This offers a particularly positive outlook for purpose-driven organizations that involve young generations in their entire business operations. Sources: link, link

Aging will not only procure greater investment in healthcare but will ultimately lead to a more elderly labor market. By 2030, researchers estimate that healthcare and related jobs from aging could grow by 50 million to 85 million.  An aging workforce will ultimately lead to a higher retirement age and the likelihood of four-generational working. In other words, younger people will likely enter the workforce while their grandparents, or even great-grandparents, are pursuing careers. It is not surprising that the number of economically active people aged sixty-five and over is projected to increase by one-third over the next decade.  Knowing that the future of work will likely consist of the old and young, just remember to say hi to your grandparents when you bump into them at work.

+ Chia-Erh Kuo
I love this short conclusion! Perhaps it's also interesting to look into how the Japanese government has been trying to keep the elderly in the labor market longer to sustain the country's economic competitiveness. A more elderly labor market is believed to benefit countries facing an acute labor shortage. Source: link

Shifting our lens toward a global scale, it is likely that a rapidly growing workforce, such as in India, may enjoy a “demographic dividend” that boosts GDP growth. If young people are employed, the combination of bright minds and a motivated labor market will allow companies to cherry-pick top talent and innovate within our technological world. Meanwhile, countries with a shrinking workforce, such as Japan, can expect lower future GDP growth, solely driven by increases in production efficiencies.  This shows that the potential of the labor market is influenced by certain trends in communities such as age. This reflects the ability of certain countries to prosper and grow their workforce.

On the topic of an evolving workforce, gender diversity has established profound shifts. In each country within the OECD, gaps in the employment rate between men and women are projected to close by half in 2050.  Corporations are likely to tap into the potential of female workers and implement programs to inhibit inclusivity. The ability to build a business that recognizes the value and contribution of workers of all backgrounds has been crucial for prosperous and resilient companies.

+ Chia-Erh Kuo
To foster inclusivity, companies must make meaningful changes. For many, narrowing the gender gap should be the priority.

In my observation, a recent international regulatory trend might help us build a more equal workplace. Some governments have started pushing corporations to make their first step: UK companies are already required to publish an annual report containing data on their gender pay gap. In the future, companies employing at least 250 people in the EU will also have to start providing data on wage data. Sources: link, link

In reflecting on the changing demographics in the labor market, one thing is for certain: there is a positive shift from the concentration of opportunities from the few to the hands of the many. Hence, the future of the labor market will be redefined by diversity, age, and the industries themselves.

Although the future of work may be daunting to many, the future of the labor market holds promise for more opportunities than ever before. Unlike previous industrial revolutions, society has become considerate toward a work-life balance and greater diversity within the workforce. From our need to prioritize a work-life balance to exemplifying great care for our physical and mental health, many have recognized that a competent professional is a healthy professional. Looking toward the future, it is not necessarily a question of “Will machines and advancements in technology replace the number of available jobs?” Rather, it is a question of how society will use technological innovation to improve how it works and derives solutions for the world’s most complex problems.

+ Elias Sohnle Moreno
This chapter talks extensively (and very well) about job displacement but doesn't consider the potential scenario of net job destruction due to automation. It seems to take for granted that automation will create as many employment opportunities as it replaces. What if automation destroys more jobs than it creates? How could this scenario impact demographics and livelihoods, especially given that the available workforce will grow significantly? 

+ Chia-Erh Kuo
Agree! I think automation will likely become a nightmare for vulnerable employment, especially in some labor-intensive industries or developing countries.

1.6 Changing Policies - Governments’ Roles in Economics
A government can steer the direction of a country’s economy through various measures. Changes in policy design often reflect the structural changes we are currently facing. This section discusses the two main aspects of governments’ roles in economic activity: central banking and taxation.
1.6.1 Central banking
Central banking plays a vital role in macroeconomic and financial stability. Although not all central banks are government agencies or legally owned by governments, as financial institutions, they carry out the nation’s monetary policies. Central banks, often regarded as the lenders of last resort, are in charge of the supply of money, and conduct related policies to ensure price stability and the smooth functions of financial markets. The role of central banks is evolving amid the structural changes in financial markets and the real economy. 

One trend worth observing is the emergence of CBDCs, which are the virtual form of government-issued currencies (fiat currencies). The idea of promoting such digital currencies is closely linked with the waves of digitalization. The rising need for non-cash payments worldwide has pushed central banks to rethink the forms of government-issued currencies. The system design of CBDC would likely vary between jurisdictions as central banks make choices that best suit their own circumstances. Common considerations include continued access to central bank money, resilience, a diversity of payments, an encouragement of financial inclusion, and improving cross-border payments. 

+ Elias Sohnle Morero
I consider that central banks are entering the digital currency arena as a response to the threat to the central banks' control over money circulation caused by the adoption of cryptocurrencies.

A group of seven central banks—the Federal Reserve, the European Central Bank, the Bank of Canada, the Bank of England, the Bank of Japan, Sveriges Riksbank, and the Swiss National Bank—has been working with the Bank for International Settlements to explore the potential of CBDCs. Many other central banks have also shown interest in the digital version of fiat currency. Since the end of 2020, more than 80% of central banks globally have been engaged in studying CBDC; some of them have progressed past conceptual research to experimenting and running pilots. 

Among central banks, the People’s Bank of China has been spearheading work on the digital version of the Chinese yuan, known formally as the digital currency electronic payment (DCEP), with real-world trials in major cities including Shenzhen, Beijing, and Shanghai. It is expected that the digital yuan could reach 1 billion addressable users in ten years, 1.6 trillion yuan ($229 billion) in issuance, and account for 15% of total consumption payments. 

Another trend in central banking is green finance. In addition to ensuring financial and macroeconomic stability, central banks could also play an active role in enhancing sustainable finance. Through their regulatory oversight and regulatory tools over the financial system, central banks are considered to be in a powerful position to support the development of green finance models, enforcing adequate pricing of environmental and carbon risk by financial institutions.  Against this backdrop, central banks have been teaming up to enhance the financial system’s role in managing risks and mobilizing capital for green and low-carbon investments, through the establishment of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS).

Aside from digital fiat currencies and green finance, it is worth monitoring how monetary policies would be implemented in the future, as well as the macro effects of those policy tools. In response to an unprecedented economic recession caused by the pandemic, central banks in many countries have adopted expansionary approaches to stimulate economies. Theoretically, quantitative easing (QE)—a form of unconventional monetary policy in which a central bank buys government bonds from the market—could encourage spending and investments. However, those massive money-printing schemes come at a cost, the risk of inflation. Tradeoffs created by the sustained use of QE are still open to debate.
According to Investopedia “quantitative easing (QE) is an unconventional monetary policy in which a central bank purchases longer-term government bonds from the open market. Buying these securities adds new money to the economy (increasing the money supply), and serves to lower interest rates by bidding up fixed-income securities. The main objective of these actions is to encourage spending and investments in businesses.” 
Going forward, central banks are bound to face a set of structural changes. Beyond financial sustainability, central banks are expected to have a growing role in addressing challenges brought by digitalization and the carbon transition. To deal with the uncertainties ahead, central banks must be ready to adapt to the changing nature of payments and the real economy.
1.6.2 Taxation: The economic and social side
Taxation reflects the changing landscape in our daily economic activities. Taxation is not simply a major source of government revenue for providing public goods; it also plays an active role in resource allocation, such as mitigating income inequality and mobilizing investments in certain sectors. Since the economic sector constantly changes, tax authorities have to tackle a number of new challenges.
tax reduction in income inequality 
percentage reduction in Gini coefficients before and after taxes and transfers 
One upcoming challenge is how to design fair taxation in a globalized world. As cross-border services continue to evolve around the globe, there is rising concern about how new ways of doing business, such as the digital economy, may result in a relocation of core business functions and a different distribution of taxing rights.

Traditionally, a local physical presence is often required if a company plans to expand businesses in a new market jurisdiction. Earnings from those in-country operations are subject to tax in the market country. However, advances in data technologies and business practices have allowed multinational corporations to centrally manage their business at their headquarters, with a less physical presence needed in overseas markets. This significant change has posed challenges for international taxation; data compiled by the OECD shows that $240 billion is lost annually from tax avoidance by multinational companies. In light of these concerns, the Base Erosion and Profit Shifting (BEPS) Action Plan was established to equip governments with domestic and international instruments to address tax avoidance. The recently signed global minimum tax is an exciting move in the development of global tax reforms. A total of 136 countries, accounting for over 90% of the global economy, inked a historical deal aimed at ensuring companies pay a minimum tax rate of 15%, as part of the two-pillar solution under the BEPS. It is estimated that this minimum tax could generate $150 billion in additional global tax revenues annually.

Another challenge for tax authorities is how to redefine the role of tax in post-Covid economic recovery. As the pandemic has turned into a human and health crisis, which deepens inequalities worldwide, tax-design discussions have moved toward a relatively broad focus on the link between taxation and inclusive economic growth. Given the redistributive capacity of the tax system, tax policy can enhance equity by narrowing income and wealth gaps. In addition, tax policy could play a role in steering investment and consumption choices in support of low-carbon alternatives. Many jurisdictions are already working to address climate-related risks and create incentives for businesses and individuals by using tax tools. For example, several tax-policy options have been discussed as part of the EU Green Deal, such as carbon excise tax, carbon border tax, and plastic tax.

Some have argued that carbon pricing could be implemented as a core tool of a green tax-policy framework to foster decarbonization. Those investments, in return, could make a significant contribution to public finances by generating tax revenues.

Looking forward, the challenge for tax authorities is to achieve both economic and social objectives, taking into account side effects that might last for generations. Structural trends, such as digitalization and rising inequalities, are pushing policymakers to reconsider the relationship between tax design, economic growth, and sustainability.

+ Elias Sohnle Morero
AI is improving the skills that we thought were unique to us, like creativity, empathy, etc. Could the emergence of Artificial General Intelligence (AGI) truly make humans obsolete? Even if it is highly speculative, can our welfare systems guarantee decent livelihoods for the majority of people if they become idle over the course of the next century?

1.7 Economic Change: What’s heading our way?
This chapter has outlined trends and changes concerning economics. Important changes as a result of, for instance, technological developments and sustainability concerns are very likely. Due to current circumstances, some changes expected to happen ten years in the future have already started evolving.

This chapter touches upon many different stakeholders, from individual consumer preferences to company interests, governmental decisions, and the global system. Yet, none of these are completely separate from the other. Greater automation and sustainable business approaches will drive the future of production. This is also in response to the changing behavior of consumers, who demand more and more sustainable and futureproof options. Such developments in production and consumption will also directly influence international trade and government policies.

Additionally, the rise of cryptocurrencies adds to both new opportunities and new risks for the future of economic systems. An aging labor force and progress in automation will change the way people and technology cooperate in the production and service sectors. Governments are very much included in all these changes, and their policies will directly impact how much society can benefit from new economic opportunities. This leaves one to wonder about the future of economies. Which other unexpected changes are upon us? Which role can new technologies play in your work?

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