The Lessons Learned from the Past Decade
Looking back at the previous decade, one could describe the 2010s as a period of recovery, as well as a decade that was dominated by the consequences of events during the previous ten years. Economically, much of the 2010s was characterized by efforts to recover from the global financial crisis of 2008-2009. Politically, the conflicts of the early part of this century in Central Asia and the Middle East continued to have a major impact on global security during the 2010s, while changes in technology, demographics and communications had a massive impact on global politics during this period.
One of the overriding themes of the past ten years was the sense that the world’s developed countries were losing their firm grip on power after many years of slower economic growth and increasingly dysfunctional politics. In their place, emerging markets rose to the fore, sensing that their time had come to assume leading positions in the world. However, by the end of the past decade, it appeared that, while Asian emerging markets were indeed rising to the challenges of the modern world, most emerging markets outside of Asia were ill-prepared for the changes that have come in recent years. Overall, the past decade has seen yet another dramatic shift in global economic and political power, one that is likely to continue in the 2020s.
To assess how the 2010s progressed, one needs to go back to the beginning of this decade to assess the state of the world at that point in time. As most can remember, the beginning of the 2010s was a time of great concern and uncertainty. Economies all around the world were just entering the recovery phase that followed the global financial crisis, with some major economies such as Europe still facing years of upheaval. In the immediate aftermath of the financial crisis, it was emerging markets that jump-started the recovery, with many emerging markets recording some of their highest rates of growth in recent decades. Meanwhile, the conflicts in places such as Iraq and Afghanistan continued, while popular unrest across much of the Middle East and North Africa was about to unleash a new series of conflicts in that region. In fact, the early part of the 2010s saw a world filled with trepidation for some, but great hope for others.
By the end of the 2010s, the world was a much different place than it was at the beginning of the decade. Most importantly, unipolar moment that the United States had enjoyed in the two decades after the end of the Cold War had come to an end, replaced by a new superpower rivalry between an increasingly-inwards looking US and a more assertive China. Meanwhile, Russia, written off by many as a declining regional power, re-emerged on the global stage, embroiling itself in conflicts and political standoffs around the globe. In Europe, the economic turmoil of the first half of the 2010s was followed by a great deal of political turmoil in the second half of the decade, culminating in the United Kingdom being on the verge of withdrawing from the European Union.
Economically, the 2010s appear to be a decade in which the global economy performed relatively well when compared with the levels of growth that were generated in previous decades. However, this growth masked major divisions. For example, most developed economies have not fully recovered from the impact of the global financial crisis more than a decade earlier, resulting in a second consecutive decade in which growth in developed economies averaged less than 2% per year. Meanwhile, there were also major divisions among emerging markets, with more competitive economies in Asia and parts of Central Europe vastly outperforming their less competitive counterparts in regions such as Latin America, East Europe and the Middle East. Overall, the 2010s were marked by a clear shift in economic power to Asia at the expense of most of the rest of the world.
There are many geopolitical lessons to be learned from the developments of the 2010s. The first is that the rivalry between the United States and China will define the 2020s, with other states being forced to balance their economic and defense ties with these two behemoths. For China, the increasing assertiveness that it showed in the 2010s, both in its near-abroad and increasingly further afield. Is all but certain to continue over the next ten years. In contrast, the return of isolationism and protectionism as a force in the United States may yet continue, even as the US’ immense power keeps it involved in a myriad of flashpoints around the globe. For other powers, the 2020s are likely to be characterized by their struggle to carve out a role for themselves between these two leading powers, while attempting to maintain ties with both. Politically, the divisions, fragmentation and gridlock that emerged in the past decade are expected to remain in place and could spread to more countries in the years ahead. In fact, if the 2010s proved anything, it is that governing is becoming either more difficult, or more repressive. Overall, geopolitical risk levels are likely to rise in the 2020s as the relationship between the US and China grows more fraught and unrest spreads to more parts of the world.
The 2010’s also taught the world a number of economic lessons. First and foremost, it is becoming more difficult for the world’s wealthier countries to generate growth, while many of its emerging markets are also struggling to do the same. The impact of the demographic decline that has resulted from falling birth rates in most areas of the world is now being felt across many sectors of the economy as labor forces and potential markets both shrink. Meanwhile, at the beginning of the 2010s, it was widely assumed that global trade and investment growth would remain strong for the foreseeable future. Instead, trade and investment levels were stagnant for much of the decade, and could decline in the 2020s if protectionism continues to spread. Still, even as population and trade growth slowed, it was assumed that technological advances would lead to soaring rates of productivity growth, but this too has not happened.
Asia, and to a lesser degree North America, remained the drivers of global economic growth in recent years, a trend forecast to continue in the years ahead, with Asia itself accounting for half of the world’s additional economic output in the 2020s. Meanwhile, economic growth rates in China will continue to trend downwards, and it is uncertain if new growth markets such as India, Southeast Asia or Sub-Saharan Africa will emerge to replace China as the next high-growth large emerging market. At the same time, those economies that entered the 2010s with high hopes that failed to materialize are entering the 2020s with much less confidence and lower expectations of growth for the decade ahead. Altogether, the 2020s are likely to prove challenging for most major economies, while geopolitical risk levels are expected to remain relatively high over the course of the next ten years.