Megatrends are long-term developments of global significance – for example, climate change, the decline in biodiversity or the aging of society. They pose major challenges for politics, society, and the economy, but often also offer major opportunities. Rapidly advancing technological development is the best example of this. In order to master these challenges but also to take advantage of possible opportunities, it is important to recognize megatrends at an early stage. Politicians, companies and other stakeholders can then develop successful strategies to shape a sustainable future.

The Roland Berger Institute has been dealing with megatrends for nearly two decades and regularly provides an up-to-date overview in the Trend Compendium. In this new issue we present six megatrends in the following areas: people & society, politics & governance, environment & resources, economics & business, technology & innovation, and health & care. The six megatrends are briefly presented below; they are divided into subtrends in order to more shed light on relevant areas.

Population – Migration – Education & Labor – Values

People are naturally the focus of megatrends. They are the drivers of every trend but at the same time they are exposed to their effects. Thus, the focus here is not merely on data concerning demographic development of countries and regions, but also on training and work opportunities, and – equally – on societal values and human rights.

• Population. Due to declining birth rates, world population growth will slow down slightly in the coming decades. In 2050, 9.7 billion people will populate our planet – today (2023) there are 8 billion. Growth varies greatly between country clusters and regions/continents. While the population in most developed countries is declining, many emerging and developing countries are still growing strongly. Africa is showing the strongest growth, while Europe’s population is shrinking. The most populous continent remains Asia; the largest countries in 2050 will be India, China, Nigeria, the USA and Pakistan. Society is aging due to low birth rates in many industrialized countries.
• Migration. The movement of people across national borders, but also within, will continue in the future. The reasons are manifold: the pursuit of economic betterment, or the flight from violence and – increasingly – climate change, which makes life much more difficult or even impossible in many regions.
• Education & Labor. People, and thus the entire economy of a country, benefit from good educational systems. Forecasts expect levels of education to increase worldwide, which will benefit people in emerging and developing countries in particular. The beforementioned aging of society in industrialized countries leads to a shortage of skilled workers, which could be partly mitigated by immigration from the growing developing and emerging countries.
• Values. The United Nations Declaration of Human Rights is now three quarters of a century old, but massive human rights violations are still occurring worldwide. It is difficult to predict whether the human rights situation will improve by 2050. Technological development means that more and more people are able to share their opinions, raise awareness and organize protests, but at the same time it also gives states the means to carry out large-scale censorship, to disseminate propaganda or fake news, and to oppress and exert control over its people.

Global Risks – Geopolitics – Future of Democracy

Thorough policies always take into account global risks, such as global warming or pollution of the oceans. Globally coordinated action is therefore essential, but this is becoming a growing challenge. On the one hand, this is because key players increasingly see each other as rivals instead of partners. On the other hand, this is due to the fact that autocratic tendencies are also on the rise within democracies.

Global Risks. Climate change, natural disasters and the loss of biodiversity are at the top of the list of global risks for the decade ahead. According to many experts, however, economic and geopolitical risks will dominate in the short term. The assessment of risks differs from country to country.

Geopolitics. Even before the Russian invasion of Ukraine, the world’s geopolitical situation was characterized by tensions between key players. Since the beginning of the war, Western democracies have been more united than ever. The future geopolitical development is uncertain, but it is to be expected that the rivalry between the different actors will continue or even increase.

Future of Democracy. In the last decade, the number of liberal democracies has declined worldwide, while the number of autocracies has increased. Within democracies, popular dissatisfaction with this form of government has been growing for almost 20 years, although there are clear differences in country comparisons.

Climate Change & Pollution – Biodiversity – Resources & Raw Materials

The fight against climate change and environmental pollution, the protection of biodiversity, and the careful use of resources are closely related. Everything is about preserving an environment worth living in, which also ensures the survival of future generations on our planet.

• Climate Change & Pollution. There is a consensus among scientists that if global warming is to be limited to 1.5-2°C, emissions of greenhouse gases must be reduced quickly. This is also recognized by most politicians, but a policy that leads to climate neutrality by 2050 is far from global implementation. In addition to climate change, there is also the problem of pollution, such as exhaust fumes and plastic waste.
• Biodiversity. Biodiversity is on the decline in many parts of the world. Biological diversity is not just of intrinsic value – numerous species are instrumental in providing huge services for the economy, such as bees acting as pollinators in agriculture, or whales and krill as CO2 stores.
• Resources & Raw Materials. Unless there is a global shift in energy policy, fossil fuels will still account for the largest share of energy consumption in 2050. Regarding water, the focus is on increasing the efficiency of the supply chain as well as of consumption. Regarding food, the aim is also to increase productivity in agriculture. Other raw materials, such as rare earths, are often found in just a handful of countries, which almost inevitably leads to strong dependencies among end users.

Global Trade & Value Chains – Power Shifts – Energy Transformation – Debt Challenge

The world economy is in the midst of a comprehensive transformation. Value chains are being reorganized, economic power centers are shifting, and energy production is being switched to sustainability. The fact that all of these changes are happening against a backdrop of high levels of debt makes the task all the more challenging.

• Global Trade & Value Chains. Before the 2008/2009 financial crisis, global growth of trade was significantly faster than global growth of GDP – globalization was progressing at a rapid pace. Since the financial crisis, both growth rates have been almost the same. Globalization has slowed, partly due to increasing trade restrictions. The domestic share of the value added of export products increased, while global value chains experienced additional pressure from delivery problems in the wake of the COVID-19 pandemic. Many countries and companies seek a way out of the current crisis by broadening their supplier base in order to avoid one-sided dependencies.
• Power Shifts. China and India are already ranked 2nd and 5th in the global ranking of economies. In 2050, China will be number 1, with a GDP significantly larger than that of the US while India will be 3rd. Indonesia climbs the top 10 to become 6th by 2050, behind Germany and Japan. Trade agreements such as the Regional Comprehensive Economic Partnership, an association of 15 countries from Asia-Pacific, are shifting economic power to emerging regions.
• Energy Transformation. Energy production and energy use exert the greatest influence on the transformation regarding economy and society towards climate neutrality. Enormous efforts are required to achieve the goal by 2050. Today’s investments to reduce CO2 emissions must more than triple in the coming years – totaling more than 4 trillion US dollars annually worldwide.
• Debt Challenge. The COVID-19 pandemic has resulted in already high public and private debt levels increasing further. The war in Ukraine and investments in reconstruction further increase debts of donor countries.

Value of Innovation – Frontier Technologies – Humans & Machines

Technological progress is a key growth driver. Progress is primarily fueled by frontier technologies that develop rapidly and are used in many applications. Technologies such as artificial intelligence are redefining the human-machine relationship and therefore require careful consideration of respective opportunities and risks.

• Value of Innovation. Analyzes show that the most innovative economies in the world are usually also the richest. Large national economies are investing – both publicly and privately – in future technologies in order to maintain their lead. It is difficult for developing countries to improve their position because adequate research institutions, well-trained scientists, and developers are often lacking.
• Frontier Technologies. Not all technologies are equally influential. The so-called frontier technologies are characterized by rapid growth and their great importance for many economic sectors. They include, for example, artificial intelligence, techniques for generating renewable energy, and nanotechnology. In the development of key technologies, China and the US occupy prominent positions.
• Humans & Machines. Artificial intelligence (AI) is fundamentally changing the relationship between humans and machines. In an expert survey, half of the respondents stated that machines with AI will be able to perform all tasks better than humans within less than 40 years. On the one hand, the exponentially increasing capabilities of AI raise many hopes that pressing challenges such as climate change, hunger and diseases will be solved. On the other hand, great fears are also being expressed – remarkably by AI experts themselves – including job losses, an end to human control over many processes, harmful behavior by AI, and even an existential threat to humanity.

Global Health Challenges – Healthcare of the Future – Caregiving

The COVID-19 pandemic has underscored the global importance of good healthcare. Numerous challenges have to be mastered to improve outcomes worldwide, and medical and technical innovations can help support this. An efficient care system complements good healthcare – this aspect is becoming increasingly important due to the aging of society.

Global Health Challenges. Combating pandemics effectively is just one of many challenges facing healthcare systems. In addition, we particularly need better access to healthcare in developing countries, ensure healthcare in conflict areas, and reduce the negative health effects of climate change and pollution. Overcoming these challenges will neither be easy nor cheap. Although experts assume that health expenditure will increase worldwide, the gap between poor and rich countries will not decrease.

Healthcare of the Future. Medicine, medical technology and pharmaceuticals are highly research-intensive. The financial, organizational and staffing effort is considerable. Despite this, groundbreaking innovations keep making it to market – let’s just think of mRNA vaccines, which have played such a crucial role in combating the COVID-19 pandemic. Cell and gene therapy and the growing use of AI are further examples of future important healthcare applications.

Caregiving. As the population ages, the need for care will continue to increase. This particularly affects industrialized countries, but also others, such as China, where in 2050 more than a quarter of the population will be 65 years old or older. In order to ensure efficient care, high levels of investment in the care system are necessary and many additional care workers have to be recruited.

We thank Steffen Geering for his editorial contributions.