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Events in West Asia have raised the spectre of the 21st century’s first World War. Preventing the US-Iran conflict from escalating might be the world’s immediate challenge in 2020 but, taking the long view, several, more critical challenges remain unresolved. For all the progress made so far, addressing these challenges will define our future. We highlight 10 below.

Climate crisis

From fires to floods, the world has been ravaged by disasters in recent years. Though they are natural calamities, the cause is man-made. Emissions from human activity have driven rising temperatures across the world. This, in turn, is disrupting weather patterns and increasing the frequency of extreme weather events. If left unchecked, emissions could cause global average temperatures to increase by over 4 degrees Celsius (°C) above pre-industrial levels by 2100, according to Climate Action Tracker, an independent scientific group tracking climate change. Even in the best-case scenario, with an active response towards reducing emissions, it would limit the increase to just 2.8°C and still inflict a heavy toll on the environment and humanity. Achieving 1.5°C, as established in the Paris Agreement, will require much more global commitment and coordination (Chart 1).

Air quality

The same emissions that clog up the atmosphere also clog up our lungs. And while much of the rich world has cleaned up its air, in India and other poor countries, breathing itself has become fatal. The death rate from pollution is steadily increasing in India and other low-income countries, according to the Institute for Health Metrics and Evaluation (IHME), a global population health research centre. Though a daunting task, tackling air pollution is not impossible. China, for instance, used to have the highest rates of pollution-related deaths in the world but this has steadily improved over the last decade (Chart 2).

Sustainable growth

Both the climate crisis and pollution have been driven by a relentless quest for growth. Yet, it is this growth that has generated unprecedented prosperity and improved the lives of millions. Now governments will have to balance growth with the environment. And this task will only get harder as growth dries up across the world. According to one projection, average growth rates for almost all the major economies are expected to steadily decline in the coming decades (Chart 3).

Productivity stagnation

Growth is slowing because its key engine is fizzling out. Whether it’s the conveyor belt or the computer, long-term growth is ultimately driven by innovations and processes that use labour and capital more effectively. But these innovations and processes, known as total factor productivity (TFP), are drying up. Globally, TFP growth rates have fallen in recent years, apart from India. High productivity growth in India, however, reflects issues with the way output is measured in the country rather than productivity improvements (Chart 4).

Income inequality

One immediate effect of stagnating productivity is on wages. In many parts of the world, workers’ wages have not increased much over time, especially when compared with the top earners, and inequality has risen significantly. One estimate suggests that 44% of the world’s wealth is owned by just 1% of its population. How this inequality is tackled will define politics in the 21st century (Chart 5).

Automation-led disruption

Another risk for workers is automation. A 2013 study estimated that nearly half of all jobs in the US could be automated in the coming decade. Building on this model, the World Bank estimated that 43% of India’s employment is vulnerable to rising automation. An International Monetary Fund study found that women could be hurt more than men. Even if these estimates are exaggerated, the risks of automation eating up jobs remain. Whether it’s through basic income or retraining, governments will need to find ways to manage this transition (Chart 6).

The globalization backlash

After years of increasing globalization, the tide seems to be turning. Trade wars are escalating, borders are getting tighter and nationalist governments are growing in popularity. All this will have important implications for global value chains that underpin the world economy. But, more ominously, rising nationalism could affect both domestic and international security by fuelling internal and external conflict (Chart 7).

Big tech dominance

Over the last decade, a handful of technology firms—Google, Amazon, Facebook and Microsoft—have grown in both size and clout. From communication channels to entertainment, their services now underpin much of human activity. But their universal pervasiveness also raises big questions—especially on privacy infringements, market power and political influence (Chart 8).

Ageing populations

By 2100, the United Nations estimates that there will be 11.2 billion humans on the planet. And more than half will be aged 42 or above. In India, the median age will be even higher at 47. As fertility rates fall and healthcare improves, the world will get much older. Ageing populations bring a host of challenges for economies and societies. Labour forces shrink, while public finances and healthcare systems get strained (Chart 9).

Lifestyle diseases

Prosperity and shifting demographics will also change the nature of public health threats. In the 20th century, lack of food was the defining nutrition issue; in the 21st century, there may be too much of it. According to IHME, obesity is already one of the biggest risk factors to public health and this will only increase as societies get richer (Chart 10).

More generally, as the diseases associated with poverty are eliminated, those associated with prosperity, such as blood pressure and high sugar, are likely to grow.

This is the concluding part of a two-part series on the achievements and challenges of the 21st century.

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