Reimagine your future: megatrends and international development (part one)

 

Developing and emerging economies are at the heart of several major changes which will transform the role of international development and the way that aid is delivered by donor organisations. 

PwC has identified five megatrends – demographic and social change, the shift in global economic power, rapid urbanisation, climate change and resource scarcity and technological breakthroughs – which we see as the big forces that are disrupting the economy, business and society as a whole today – and which will still be important over the next decade.

This blog will lay out how three megatrends in particular;  (demographic and social change; the shift in global economic power and rapid urbanisation) are colliding to drive fundamental shifts in the international development and aid landscape over the coming decades.

Demographic and social change: another billion people will be added to the world’s population by 2025, but the pace of change will vary immensely.  Whilst Europe’s population shrinks, Sub-Saharan Africa’s population will grow faster than any other region in the world to 2050, doubling in size.  As well as being large, Africa’s population will also be young in a world which is getting older overall. 

The aid sector can play a crucial role in helping Africa reap the benefits of its ‘demographic dividend’.  Donors and partners will need to have a strong focus on creating more jobs and skills for young people, supported by the right policy conditions. Could this be where the private sector steps in to drive the agenda – boosting apprenticeships and opportunities for millions of young people, on an unprecedented scale?

The shift in global economic power: economic power is shifting to the east and south but at a quicker pace than many people think. By 2016, it’s expected that the number of people in  Asia-Pacific who are middle class, will overtake in number, the North American and European middle classes combined.We’ve already seen recipient countries like China and India move to become aid donors in a short space of time and new entrants to the aid landscape are challenging traditional models of delivering development. Conditionality and stringent reporting requirements (the hallmarks of many traditional donors) may be less of a priority for these new donors which recipients may see as a welcome change.

Traditional donors will need to rethink the way in which they prioritise and deliver aid, including how far the Western model of conditionality, accountability and transparency can be promoted.  What if there is a significant shift among aid recipients towards new donors, bypassing traditional donors and the Western model?  How will traditional and new donors best work together, with such different models and priorities?     

Rapid urbanisation: strong population growth is leading to an expansion of cities across the world and this will affect Africa and Asia more than anywhere else.  This places even more of a burden on infrastructure, energy, water availability and the social fabric for cities that are already under pressure. Cities can’t keep growing in the same way as before. Leaders will be presented with difficult choices if growing cities are to remain liveable communities.  For the aid sector, the focus should be on supporting governments to build fairer, cleaner and more sustainable cities, with people at their centre and based on a sharing economy.

Donors and partners will need to think carefully about urban development, with a particular focus on the poor.  Could developing economies ‘leapfrog’ developed countries, with an opportunity to test new innovations in the way in which we think about and design, cities?

In our next blog we’ll consider the final two megatrends; climate change and resource scarcity as well as technological breakthroughs and what impact they could have on the aid landscape.  Whatever the outcome, donors will need to be agile and have a firm eye on global changes in order to remain successful.   

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