Hafed Al-Ghwell
In the 18th century, some of the first nation-states raced to industrialize, spawning a scramble during the 19th century for the territory and resources required to fuel the nascent industries of what are now the world’s advanced economies.
Likewise, during the 20th century we saw the energy rush, be it oil or nuclear, as wartime economies shifted toward mass consumerism, culminating in the information age that is now propelling us toward new frontiers such as automation, artificial intelligence, and the decentralized ledger technologies used in blockchains, to name but a few.
These innovations will undoubtedly be critical in global efforts to deal with myriad convergent crises, including climate change. However, as more countries achieve parity in terms of technological advances, we can expect a new scramble to monopolize the planet’s last uncontested resource — its human capital.
At present, such a scenario might appear far from likely. After all, economic migrants continue to comprise about two-thirds of international migration, while refugees and other displaced persons fleeing violence or conflict account for just over 10 percent.
International migration remains high overall, and projections suggest it will continue to increase over the next two decades as a result of the usual drivers that affect origin and destination countries.
Currently, average per capita incomes are more than 50 times higher in wealthier countries than in low-income nations, and the World Bank estimates it will take more than a century to close the income gaps if current growth rates persist.
In short, socioeconomic differences have historically driven migration and this trend might intensify, but only up to a certain point; as with all resources, aside from renewables, even human capital is finite.
Over the next two decades, developed countries, with their aging populations and shrinking workforces, will need growing numbers of foreign workers. According to the UN, the number of people over the age of 65 is expected to double to about 1.3 billion by 2040, at which point they will make up a quarter of the population of the developed world.
European and East Asian countries will be most affected by this, due to low birth rates. It will result in a reduction in working-age populations but any attempt by governments to delay retirement would be a political own goal, as evidenced by the mass protests against such moves that have already taken place in Greece, France and Russia.
A number of governments are increasingly keen to address these issues, not least because Japan remains a veritable case study of the potential cost of inaction. The Japanese economy at one time enjoyed a sustained period of growth, averaging about 4 percent a year in the 1980s. Now, what was once the world’s second largest economy can barely eke out a growth rate of 1 percent, in part because of its shrinking pool of labor.
On the workforce side of things, automation could address some of the emerging gaps, especially in manufacturing and other low-skill jobs. However, it will struggle to replace service professionals and highly skilled occupations.
Besides, even if countries did manage to solve their labor shortages through automation, their economies would still need to sustain consumption levels that can propel growth and attract foreign investment, which is critical to maintaining overall competitiveness. Machines and clever programming alone will not be able to do that.
Nor will they be able to reduce the shares of national budgets needed for elder care, which creates new constraints. Keeping up with rising pension costs could, for example, limit expenditure on national defense, as is already happening in NATO countries.
Moreover, many developed countries will need additional migrant workers to care for those increasingly elderly populations. It is predicted that by the next decade, developed countries will face a shortage of 2.5 million nurses and 400,000 doctors. Some governments hope to solve this shortfall by tapping into projected surpluses of healthcare workers from poorer countries.
We are already seeing the first signs of this future scramble for what will be increasingly scarce human capital. Some countries have begun to offer incentives to attract foreign labor. Japan, for example, which has a median age of just under 50, has started to ease visa restrictions. South Korea plans to offer extended stays and other perks with the aim of attracting and retaining highly sought-after migrant workers.
Similarly, Canada’s Express Entry, the EU’s Blue Card, and Australia’s points-based immigration system are a few other examples of the ways in which archaic, bureaucratic and intentionally complicated systems are slowly changing, by prioritizing skilled immigrants and rewarding them with a fast-tracked residency process or even citizenship.
Europe, in particular, will need millions of new, young workers as soon as 2025 if it plans to sustain adequate employment levels and close gaps in the labor market. Yet many Europeans do not want to do the types of jobs that migrants are willing to take on, which necessitates that authorities look elsewhere and make the case that countries such as Spain, Italy, Germany, France or the UK are desirable destinations for permanent settlement.
Of course, this entails the implementation of policies that prioritize growth and stability over fringe concerns about reduced cultural homogeneity. Unfortunately, this is easier said than done and prevailing trends do not instill much confidence that things will change for the better any time soon.
As competition heats up to attract the planet’s dwindling human capital, so too will anti-immigrant sentiment and harmful race-based ideologies in destination countries. These risks could lead to social unrest, political instability and the degradation of the very resource countries are seeking — talented individuals who can contribute to the economy and society.
The scramble for human capital in the latter half of the 21st century will present opportunities and risks for countries worldwide. Nations will need to carefully navigate this new race, and ensure that they can attract and retain the skilled workforces they need while addressing potential challenges to social cohesion and global stability, since these decisions will shape the global landscape for generations to come.
The persistence of a strong cultural preference to maintain ethnic homogeneity and national identity will likely provoke public opposition and inflame societal tensions, even in countries that require not only talented individuals but also an influx of working-age adults.
Consequently, some political leaders might attempt to capitalize on such public sentiment by advocating or implementing policies restricting migration, further polarizing electorates and invigorating nationalist and nativist political agendas.
We saw this happen in 2015, when EU member states received more than a million first-time asylum applicants, primarily from Afghanistan, Iraq and Syria.
The surge in migration quickly divided the public sphere on the potential consequences of such migratory surges, eventually bolstering support for fringe, anti-immigrant voices across Europe.
However, it is essential to consider the fact that the supposed costs that new migrants impose on destination countries — such as strained social services, increased competition for jobs, and depressed wages — tend to be minimal, short-lived, and outweighed by the long-term economic benefits.
Local governments typically bear the primary healthcare, education and infrastructure burdens of increased immigration. Nevertheless, these effects are often offset over time, as is evident in New Zealand, where most migrants begin to make net contributions to the economy within five years of arrival, according to the UN.
A study by the Organization for Economic Cooperation and Development found that immigrants contribute more in taxes and social contributions than they receive in benefits. This demonstrates that, despite the many difficulties associated with managing cultural identity and public opinion, the long-term economic benefits of migration should not be overlooked.
Countries must adopt policies that balance the need to attract skilled workers against the potential risks to social cohesion and global stability, to help mitigate the fallout from the inevitable scramble for human capital. Such strategies might include the implementation of targeted immigration policies that prioritize in-demand skills, while also investing in education and training for the native population.
In addition, countries must collaborate to reduce the potential drawbacks of importing skilled labor. The potential for a brain-drain and widening skills gaps as a result of the unchecked emigration of educated and skilled individuals from their home countries could lead to a vicious circle of underdevelopment, with the loss of skilled workers hampering economic growth and discouraging investment.
Ultimately, if the world’s economies are to thrive in the latter half of the 21st century, they must recognize that human capital is both a competitive advantage and an imperative. The next scramble for resources is already upon us and will only accelerate in the coming decades.
