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Global Economic Trends refer to current issues of the global economy that are shaping our future, in the next three months as well as in the next three, five years. Global Economic Trends are not a prediction of what is going to happen; it is a statement about what is currently happening. Global Economic Trends are currently used by organizations and governments to make choices about international competitiveness, new product launch, economic efficiency choices, and strategies for better economic efficiency and market competition.
13 Key Trends
At the IMD World Competitiveness Center, and through a long-standing research project that we initiated in 2008, we have identified the 13 most important Global Economic Trends. These are encompassed within the following headlines: Economic Power, Geopolitical Institutions, Society, Stakeholders, Triple Bottom Line, Consumers, Markets, Industries, Capital, Natural Resources, Technology, Information & Knowledge, and Labour. For each of them, we can isolate the most important facts surrounding them, and ask our executives and participants: "What do these global trends mean for you and your organization?"
Why is a general assessment of the global economy relevant? Why do not we think that looking ahead into the future is more relevant for governments and organizations? Simply because we start by acknowledging that predicting the future, even three months ahead, is fundamentally impossible and faulty. What is the competitive advantage of nations is; what will be the best economy in the world in say three years; what will shape the global competitiveness in the next year… These are all task that, based on historical evidence, become impossible because of the natural impossibility of accurately predicting the future.
A Guide not a Crystal Ball
Global Economic Trends, therefore, pertain to forward-looking minded executives who are interested in extrapolating, rather than predicting. At the IMD World Competitiveness Center, we have a lot of experience in executive education and economic forecasting. The typical leading economic indicators (consumer price inflation, market competition, competitive intelligence) have a very modest predicting power. Our world economies ranking of one year is hardly a good predictor of the competitiveness index only a few years later. Country rankings are volatile and changing. Japan used to be among the top three most competitive countries in the late 1980s and fell to the bottom half of our WCC results five years ago. Likewise, some economies that we considered emerging only ten years ago (Singapore, the UAE), are now on top of the world economic statistics.
The Framework at Work
We have successfully used the Global Economic Trends framework in open and customized executive education programs at IMD. We rather discuss rather than present them; we allow for critical insights rather than academic doctrine; we relate today's Global Economic Trends with tomorrow's business challenges. Even more, interestingly, we use our participants' insights to change and update the Global Economic Trends materials periodically: a few years ago, very few market observers would have predicted Brazil economic growth or the rise of China as an economic power. Doing business in Brazil is now commonplace; our research channeled through the Global Economic Trends project, helped executives in the past to assess the challenges and opportunities of investing in these markets.