Transformation of the Economic and Financial Structures of the World: the Impact of Growing Shocks of Catastrophes
Abstract
The characteristic of a supervolatile “disaster economy” is given, in which the number of shocks caused by natural and man-made disasters is growing. The factors of creating such an economy at the global level are disclosed.
The review of discussions about the future of the world (economy, finance) after the pandemic - 2020 is made. New longterm trends emerging in such an economy and the deep changes associated with them in the economic and financial structures of the world and the West are forecasted. These trends include: the collective desire for greater autonomy of households and, accordingly, changes in their demand (growth of stocks, reserves, decrease in demand for rental assets, more desire for personal property, for the acquisition of equipment and technologies that provide autonomy, development of offices at home and the transition to a different life model (to be the most at home – the least in the office and in the public space); the digitalization of households; the increasing individualization of demand for products and services; deagglomeration (living in suburbs or satellite cities); increased mobility; increased demand for goods and services related to the protection of life and health.
The global trends in the economic / financial behavior of countries are disclosed in detail: protectionism; government policy to keep “the economy on a respirator”; changes in economic ideology, in its “mainstream”; the inevitable emergence of the concept of “economic sacrifice”; growing volatility of the global economy and global finance. In particular, ahead: the development of the ideology of the “economy of fear”; demonstration of a new balance between collectivism and individualism; revaluation of the models of capitalism existing in different countries; ideological revolution in global finance. The possibilities of an unfavorable scenario in the global economy and a strong challenge that still need to be answered are shown - is development or destruction ahead?
The review of discussions about the future of the world (economy, finance) after the pandemic - 2020 is made. New longterm trends emerging in such an economy and the deep changes associated with them in the economic and financial structures of the world and the West are forecasted. These trends include: the collective desire for greater autonomy of households and, accordingly, changes in their demand (growth of stocks, reserves, decrease in demand for rental assets, more desire for personal property, for the acquisition of equipment and technologies that provide autonomy, development of offices at home and the transition to a different life model (to be the most at home – the least in the office and in the public space); the digitalization of households; the increasing individualization of demand for products and services; deagglomeration (living in suburbs or satellite cities); increased mobility; increased demand for goods and services related to the protection of life and health.
The global trends in the economic / financial behavior of countries are disclosed in detail: protectionism; government policy to keep “the economy on a respirator”; changes in economic ideology, in its “mainstream”; the inevitable emergence of the concept of “economic sacrifice”; growing volatility of the global economy and global finance. In particular, ahead: the development of the ideology of the “economy of fear”; demonstration of a new balance between collectivism and individualism; revaluation of the models of capitalism existing in different countries; ideological revolution in global finance. The possibilities of an unfavorable scenario in the global economy and a strong challenge that still need to be answered are shown - is development or destruction ahead?
About the Author
Ya. M. Mirkin
International Capital Markets Primakov National Research Institute of World Economy and International Relations of the Russian Academy of Sciences (IMEMO)
Russian Federation
Russian Federation
DSc in Economics, Professor, Head
117997, Profsoyuznaya St., 23, Moscow, Russian Federation
References
1. 2020 Intergovernmental Panel on Climate Change: Summary for Policymakers (2020). Climate Change and Land: An IPCC Special Report on Climate Change, Desertification, Land Degradation, Sustainable Land Management, Food Security, and Greenhouse Gas Fluxes in Terrestrial Ecosystems (eds. Shukla P.R., Skea J., Calvo Buendia E., Masson-Delmotte V., Pörtner H.-O., Roberts D.C., Zhai P., Slade R., Connors S., van Diemen R., Ferrat M., Haughey E., Luz S., Neogi S., Pathak M., Petzold J., Portugal Pereira J., Vyas P., Huntley E., Kissick K., Belkacemi M., Malley J.) (in press).
2. Challenges and Opportunities in the Post-COVID-19 World (2020). Geneva: World Economic Forum. Insight Report. May 2020. Available at: https://www.weforum.org/reports/post-covid-19-challenges-and-opportunities, accessed 29.06.2020.
3. COVID-19: Briefing Materials. Global Health and Crisis Response (2020). McKinsey & Company, June 1, 2020. Available at: https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Risk/Our%20Insights/COVID%2019%20Implications%20for%20business/COVID%2019%20May%2027/COVID-19-Facts-and-Insights-June-1-vF.pdf, accessed 15.06.2020.
4. Facts + Statistics: Global Catastrophes (2020). Insurance Information Institute. Available at: https://www.iii.org/fact-statistic/facts-statistics-global-catastrophes, accessed 15.06.2020.
5. Field C.B., Barros V., Stocker T.F., Qin D., Dokken D.J., Ebi K.L., Mastrandrea M.D., Mach K.J., Plattner G.-K., Allen S.K., Tignor M., Midgley P.M. (eds.) (2012) Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation. A Special Report of Working Groups I and II of the Intergovernmental Panel on Climate Change, Cambridge: Cambridge University Press, and New York.
6. Garrett Th.A. (2007) Economic Effects of the 1918 Influenza Pandemic. Federal Reserve Bank of St. Louis. November 2007. Available at: https://www.stlouisfed.org/~/media/files/pdfs/community-development/research-reports/pandemic_flu_report.pdf, accessed 29.06.2020.
7. Global Catastrophes Caused USD 56 bln Insured Losses in 2019 (2019). Swiss Re News Release, December 19, 2019. Available at: https://www.swissre.com/media/news-releases/nr-20191219-global-catastrophes-estimate.html, accessed 21.06.2020.
8. Gloor M., Perils C. (2019) Insurance in a World of Climate Extremes, Swiss Re Institute. How COVID-19 Is Changing the World: A Statistical Perspective (2020). UNCTAD. Committee for the Coordination of Statistical Activities. Available at: https://unstats.un.org/unsd/ccsa/documents/covid19-report-ccsa.pdf, accessed 21.06.2020.
9. Melillo J.M., Richmond T. (T.C.), Yohe G.W. (eds.) (2014) Climate Change Impacts in the United States: The Third National Climate Assessment. DOI: 10.7930/J0KW5CXT
10. Mirkin Ya.M. (2019) Global Finance: Future, Challenges of Growth (with the participation of Zhukova T.V., Komovoj A.V., Kudinova M.M.), Moscow: Lingua-F (in Russian).
11. Only 13% of UK Working Parents Want to Go Back to ‘the Old Normal’. The Guardian, June 28, 2020. Available at: https://www.theguardian.com/world/2020/jun/28/only-13-of-uk-working-parents-want-to-go-back-to-the-oldnormal?fbclid=IwAR2cEdS2Src_rEB-171ntsUlWiH8EocjWvbP4P9Vx3GGgn-T8YmYwz5KwFHR4, accessed 15.06.2020.
12. Reid J., Templeman L., Allen H. (2020) After Covid: The Next Massive Tail Risk. Deutsche Bank. June 2020. Available at: https://www.dbresearch.com/servlet/reweb2.ReWEB?rwsite=RPS_EN-PROD&rwobj=ReDisplay.Start.class&document=PROD0000000000509478, accessed 21.06.2020.
13. Report on Climate Risks in the Russian Federation (2017), Saint Petersburg: Climate Center of Roshydromet (in Russian). Susskind D. (2020) How Will the World Be Different after COVID-19. IMF Finance & Development, June 2020, vol. 57, no 2, pp. 26–29. Available at: https://www.imf.org/external/pubs/ft/fandd/2020/06/pdf/how-will-the-world-bedifferent-after-COVID-19.pdf, accessed 29.06.2020.
14. The World Remade by COVID-19. Scenarios for Resilient Leaders. 3–5 Years (2020). Deloitte, April 6, 2020. Available at: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/COVID-19/Thrive-scenarios-for-resilient-leaders.pdf, accessed 29.06.2020.
15.
Review
For citations:
Mirkin Ya.M. Transformation of the Economic and Financial Structures of the World: the Impact of Growing Shocks of Catastrophes. Outlines of global transformations: politics, economics, law. 2020;13(4):97-116. (In Russ.)
Views:
1313
Email this article 