Global Trends 2025
National Intelligence Council, November 2008
Edited by Andy Ross
Relative Certainties
● A global multipolar system is emerging with the rise of China, India, and others. The relative power of nonstate actors businesses, tribes, religious organizations, and even criminal networks also will increase.
● The unprecedented shift in relative wealth and economic power roughly from West to East now under way will continue.
● The United States will remain the single most powerful country but will be less dominant.
● Continued economic growth coupled with 1.2 billion more people by 2025 will put pressure on energy, food, and water resources.
● The number of countries with youthful populations in the "arc of instability" will decrease, but the populations of several youth-bulge states are projected to remain on rapid growth trajectories.
● The potential for conflict will increase owing to rapid changes in parts of the greater Middle East and the spread of lethal capabilities.
● Terrorism is unlikely to disappear by 2025, but its appeal could lessen if economic growth continues in the Middle East and youth unemployment is reduced. For those terrorists that are active the diffusion of technologies will put dangerous capabilities within their reach.
Key Uncertainties
● Whether an energy transition away from oil and gas supported by improved energy storage, biofuels, and clean coal is completed during the 2025 time frame
● How quickly climate change occurs and the locations where its impact is most pronounced
● Whether mercantilism stages a comeback and global markets recede
● Whether advances toward democracy occur in China and Russia
● Whether regional fears about a nuclear-armed Iran trigger an arms race and greater militarization
● Whether the greater Middle East becomes more stable, especially whether Iraq stabilizes, and whether the Arab-Israeli conflict is resolved peacefully
● Whether Europe and Japan overcome economic and social challenges caused or compounded by demography
● Whether global powers work with multilateral institutions to adapt their structure and performance to the transformed geopolitical landscape
Executive Summary
The international system as constructed following the Second
World War will be almost unrecognizable by 2025 owing to the rise of emerging
powers, a globalizing economy, an historic transfer of relative wealth and
economic power from West to East, and the growing influence of nonstate actors.
Historically, emerging multipolar systems have been more unstable than bipolar
or unipolar ones. Despite the recent financial volatility which could end up
accelerating many ongoing trends we do not believe that we are headed toward a
complete breakdown of the international system, as occurred in 1914-1918 when an
earlier phase of globalization came to a halt.
In terms of size, speed, and directional flow, the transfer of global wealth and
economic power now under way roughly from West to East is without precedent
in modern history. This shift derives from two sources. First, increases in oil
and commodity prices have generated windfall profits for the Gulf states and
Russia. Second, lower costs combined with government policies have shifted the
locus of manufacturing and some service industries to Asia.
Growth projections for Brazil, Russia, India, and China (the BRICs) indicate
they will collectively match the original G-7's share of global GDP by
2040-2050. China is poised to have more impact on the world over the next 20
years than any other country.
For the most part, China, India, and Russia are not following the Western
liberal model for self-development but instead are using a different model,
state capitalism. Other rising powers South Korea, Taiwan, and Singapore
also used state capitalism to develop their economies.
Many other countries will fall further behind economically. Sub-Saharan Africa
will remain the region most vulnerable to economic disruption, population
stresses, civil conflict, and political instability. Latin America will continue
to lag behind Asia and other fast-growing areas in terms of economic
competitiveness.
Asia, Africa, and Latin America will account for virtually all population growth
over the next 20 years; less than 3 percent of the growth will occur in the
West. Europe and Japan will continue to far outdistance the emerging powers of
China and India in per capita wealth, but they will struggle to maintain robust
growth rates because the size of their working-age populations will decrease.
Resource issues will gain prominence on the international agenda. Unprecedented
global economic growth will continue to put pressure on a number of highly
strategic resources, including energy, food, and water, and demand is projected
to outstrip easily available supplies over the next decade or so. Climate change
is expected to exacerbate resource scarcities.
New technologies could provide solutions, such as viable alternatives to fossil
fuels or means to overcome food and water constraints. However, all current
technologies are inadequate for replacing the traditional energy architecture on
the scale needed, and new energy technologies probably will not be commercially
viable and widespread by 2025.
Terrorism, proliferation, and conflict will remain key concerns even as resource
issues move up on the international agenda. Terrorism is unlikely to disappear
by 2025, but its appeal could diminish if economic growth continues and youth
unemployment is mitigated in the Middle East. In the absence of employment
opportunities and legal means for political expression, conditions will be ripe
for disaffection and growing radicalism.
We believe ideological conflicts akin to the Cold War are unlikely to take root
in a world in which most states will be preoccupied with the pragmatic
challenges of globalization and shifting global power alignments. The force of
ideology is likely to be strongest in the Muslim world particularly the Arab
core.
The risk of nuclear weapon use over the next 20 years, although remaining very
low, is likely to be greater than it is today as a result of several converging
trends. The spread of nuclear technologies and expertise is generating concerns
about the potential emergence of new nuclear weapon states and the acquisition
of nuclear materials by terrorist groups.
A future use of nuclear weapons probably would bring about significant
geopolitical changes as some states would seek to establish or reinforce
security alliances with existing nuclear powers and others would push for global
nuclear disarmament.
The rising BRIC powers are unlikely to challenge the international system as did
Germany and Japan in the 19th and 20th centuries, but because of their growing
geopolitical and economic clout, they will have a high degree of freedom to
customize their political and economic policies rather than fully adopting
Western norms.
By 2025 the US will find itself as one of a number of important actors on the
world stage, albeit still the most powerful one. Even in the military realm,
where the US will continue to possess considerable advantages in 2025, advances
by others in science and technology, expanded adoption of irregular warfare
tactics by both state and nonstate actors, proliferation of long-range precision
weapons, and growing use of cyber warfare attacks increasingly will constrict US
freedom of action.
Current trends suggest that a dispersion of power and authority will create a
global governance deficit. Reversing those trend lines would require strong
leadership in the international community by a number of powers, including the
emerging ones.
Long-Range Projections
In the 20th century, experts forecasting the next 20 years
roughly the time frame of this study often missed major geopolitical events,
basing their predictions largely on linear projectionswithout exploring
possibilities that could cause discontinuities.
The postwar period saw the establishment of a new international system. Although
the bipolar and nuclear age did not lack war and conflict, it did provide a
stable framework until the collapse of the Soviet Union. The development of a
globalized economy in which China and India play major roles has opened a new
era without clear outcomes.
Lessons from the last century suggest:
Leaders and their ideas matter.
Economic volatility introduces a major risk factor.
Geopolitical rivalries trigger discontinuities more than does technological
change.
Back to the Future
Asia's economic powerhouses China and India are restoring the
positions they held two centuries ago when China produced approximately 30
percent and India 15 percent of the world's wealth. China and India, for the
first time since the 18th century, are set to be the largest contributors to
worldwide economic growth.
According to projections, the eight largest economies in 2025 will be, in
descending order: the US, China, India, Japan, Germany, the UK, and France, and
Russia. China has emerged as a new financial heavyweight, claiming $2 trillion
in foreign exchange reserves in 2008.
Over the next several decades, the number of people considered to be in the
"global middle class" is projected to swell from 440 million to 1.2 billion or
from 7.6 percent of the world's population to 16.1 percent, according to the
World Bank. Most of the new entrants will come from China and India.
Globalization at Risk with the 2008 Financial Crisis?
Proactive fiscal and monetary policies probably will ensure the current panic
and likely deep national recessions will not turn into an extended depression,
although reduced economic growth could slow globalization's pace, increasing
protectionist pressures and financial fragmentation.
The crisis is accelerating the global economic rebalancing. Developing countries
have been hurt. Even those with cash reserves have been severely buffeted. In
the West, the biggest change is the increase in state power. Western governments
now own large swaths of their financial sectors.
The crisis has increased calls for a new "Bretton Woods" to better regulate the
global economy. World leaders will be challenged to renovate the IMF and devise
a globally transparent and effective set of rules that apply to differing
capitalisms and levels of financial institutional development.
Science and Technology Leadership
The relationship between achievements in science and technology and economic
growth has been long established, but the path is not always predictable. More
significant is the overall effectiveness of a nations National Innovation
System (NIS) the process by which intellectual concepts are moved toward
commercialization for the benefit of a national economy. According to a
NIC-contracted global survey of scientific experts, the United States currently
boasts a stronger innovation system than the developing economies of China and
India.
China and India are expected in 10 years to achieve near parity with the US in
two different areas: scientific and human capital (India) and government
receptivity to business innovation (China). Companies in China, India, and other
major developing countries have unique opportunities to be the first to develop
a host of emerging technologies.
Women
The explosion in global economic productivity in recent years has been driven as much by fostering human resources particularly through improvements in health, education, and employment opportunities for women and girls as by technological advances.
Higher Education
As global business grows increasingly borderless and labor markets more seamless, education has become a key determinant of countries' economic performance and potential. Adequate primary education is essential, but the quality and accessibility of secondary and higher education will be even more important for determining whether societies successfully graduate up the value-added production ladder.
Demographics
World population is projected to grow by about 1.2 billion between 2009 and 2025
from 6.8 billion to around 8 billion people. India's population is projected
to climb by around 240 million by 2025, reaching approximately 1.45 billion
people. China, is projected to add more than 100 million to its current
population of over 1.3 billion.
If current patterns of immigration and fertility continue, Western Europe could
have 25 to 30 million Muslims by 2025. Ongoing societal and political tension
over integration of Muslims is likely to make European policymakers increasingly
sensitive to the potential domestic repercussions of any foreign policies for
the Middle East.
Although the rise of no other state can equal the impact of the rise of such
populous states as China and India, other countries with potentially
high-performing economies Iran, Indonesia, and Turkey, for example could
play increasingly important roles on the world stage and especially for
establishing new patterns in the Muslim world.
Although the Western paradigm separating religious and secular authority may
still be less compelling to Muslim publics, a greater emphasis on economics and,
most importantly, greater participation of women in the work force may spur new
forms of progressive Islam.
Conflict
Conflict will continue to evolve over the next 20 years as potential combatants
adapt to advances in science and technology, improving weapon capabilities, and
changes in the security environment.
Warfare in 2025 is likely to be
characterized by the following strategic trends:
The increasing importance of information
The evolution of irregular warfare capabilities
The prominence of the non-military aspects of warfare
The expansion and escalation of conflicts beyond the traditional battlefield
Ideology
The force of ideology is likely to be strongest in the Muslim world
particularly the Arab core where Islams diverse expressions will continue to
influence deeply social norms and politics as well as serve as a prism through
which individuals will absorb the economic and cultural forces of globalization.
Religion-based networks may play a more powerful role than secular transnational
groupings in exerting influence and shaping outcomes in the period out to 2025.
Finance
The dollar is vulnerable to a major financial crisis and the dollars international role is likely to decline from that of the unparalleled global reserve currency to something of a first among equals in a basket of currencies by 2025.
Security
The United States' ability to protect the "global commons" and ensure the free
flow of energy could gain greater prominence as concerns over energy security
grow. The US also will continue to be viewed as the security partner of choice
by many states confronted with the rise of potential hostile nuclear powers.
AR Excellent piece of work. There is intelligence in the US intelligence services, after all.
