Tuesday, October 22, 2013

Tomorrow's World by Clint Laurent - Book Review

Predicting the future through Demographics!

Clint Laurent, the founder of Global Demographics Ltd attempts to predict the socio-economic future of the world in 2032, through the lens of demographics. Along with that he gives the reader an insight into the dominant trends that are emerging across different regions of the world in terms of demographic profiles, distribution of households by income, expenditure patterns and labour force. Suddenly it become obvious to you that the most critical metrics to evaluate a country are through (a) the age of the population, (b) household consumption and (c) total income of the country. And then Clint shows that how these factors change over the next 20 years, is not that difficult to predict but its effects are very contrary to what most 'experts' have been forecasting. Now, in this perspective, China and India do not look that attractive for future business growth or investment. Many other common 'truths' such as 'China's GDP needs to grow continuously to keep its population employed', 'Japan's old age population is a big challenge' , 'the young affluent are the big spenders', 'India's young population is a big asset' are shown to be largely myths of our own creation. His projection that even after 20 years India contribution to the global spending will be only 5% , is something that we should all take note off.

Clint's advice : Though there is money to be made in the East, it would be advisable to make sure that you maintain a strong base in West where the riches already exist.

The book is very impressive due to the clarity of the thought processes, effective segregation of data, proper description of sources of information, simple frameworks, and clear articulation of assumptions. Some of the important conclusions are visually highlighted with easy to understand graphs.

Only on a couple of points I find myself not happy with the author's analysis. Firstly, though we can agree that Demographics is one of the fundamental criteria to forecast a country's future (maybe as critical as how the genomic code would drive the development of an organism) , many other factors like a country's economic policies, political structure, technological innovation and global events can create dramatic changes in very short time. For example if Clint had used this model in 1970 would he have predicted the fall of the Soviet Union 20 years into the future? Or in 1990 would he have predicted where India would be in 2010? What if China blows up due to internal contradictions in the next 10 years? Secondly many of the soft factors that many countries posses do not make it into Clint's analysis. I think India has a big strength of its diaspora spread across the world - with many of them in excelling in Business, Technology & Science. If they are leveraged well, the country can jump into a next trajectory of growth (maybe as an Indian, this may be my biased hope, but i believe that this is a possibility).

The book is definitely worth reading for any one interested getting a glimpse of the future, and should be a must reading for the political leaders of countries like India. I don't think that the Indian leaders articulate to their followers that the female employment in India is only 39%, while in China it is 79%. And while they continue to disparage China's single party system, they should look at what it has done to promote education, women empowerment and so on, while in India over 50% children are undernourished and its education system is unable educate properly even a small percentage of its population. Why is a democracy unable to deliver while a 'communist' dictatorship seems to be able to deliver the goods better to the common man?

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