The world is environed with unparalleled disruption and complexity. Dangers such as climate change, inequality and geopolitical tensions have surpassed borders and sectors. The complex and quick evolution of the global risks landscape is adding to the uneasiness of nations worldwide, with developing countries at greater risk of suffering losses and damage. These risks are exacerbated by the lingering financial and health effects of a global pandemic, a European war and sanctions that affect a globally interconnected economy, and an intensifying technological arms race aggravated by increased state intervention and industrial competition. Longer-term structural changes to geopolitical dynamics, brought on by the diffusion of power across nations with various political and economic systems, coincide with a more quickly transitioning economic environment, propelling a low-growth, low-investment, and low-cooperation era and possibly reversing decades of advancement in human development. Therefore, global leaders must band together to highlight these rising threats and create durable solutions for years ahead by adopting sustainable and inclusive financial, technical, and technological cooperation mechanisms.
What are the Risks?
Natural Capital Risks
Biodiversity is dwindling more quickly than at any other time in human history. Intense human activities have negatively affected the global natural ecosystem and aggravated climate change, triggering a chain of reactions. Since more than half of the world’s economic output is dependent on nature (World Economic Forum, 2023), the collapse of natural ecosystems will have profound economic and societal consequences. For instance, increased occurrences of zoonotic diseases, a decline in crop yields and nutritional value, increasing water stress inflaming foreseeably violent conflict, loss of livelihoods reliant on food systems and nature-based services like pollination, and increasing floods, sea-level rises, and erosion caused by the degradation of natural flood protection systems like water meadows and coastal mangroves. Since 80% of Pakistan’s agriculture depends on rainfall, climate change will affect its yield in the long run (Fayaz, 2021). Consequently, conservation efforts and nature-based solutions will be unable to compete commercially with intensive, yield-focused agricultural practices, particularly in agrarian nations like Pakistan. Moreover, technology will only offer a temporary fix in the nations that can afford it.
Health Risks
Health systems all over the world face the possibility of becoming inadequate. As the disease burden intensifies and innovation broadens the scope of what medicine can treat, the relentless demand for healthcare collides with chronic capacity constraints. Given the current crises, rising stressors like violence, poverty, and loneliness may also worsen mental health. Moreover, disruptions caused by the COVID-19 pandemic have resulted in a backlog in hospital and community care that may be difficult to clear. For instance, in 2022, over 7 million people in the UK were waiting for non-emergency medical care, while 10% of job openings remained unfilled as the National Health Service struggled to retain staff (World Economic Forum, 2023).
As inflation persists, economies grow slowly or stagnate, and governments reprioritise spending to address more pressing social and security concerns. As a result, health systems are likely to face increasing financial strain. Geopolitical tensions may limit the co-development and sharing of new scientific breakthroughs, limiting respective abilities to deal with existing and emerging risks. Export restrictions on medicine and medical products could spark a humanitarian crisis and lead to controls over vital resources, such as food, with negative consequences for health. As a result of economic inequality, disparities in healthcare access may worsen across and within countries. Furthermore, an upsurge in state instability and conflict would further restrict aid delivery, disrupt vaccination programmes, and put health workers in danger.
Rise of a New Warfare
The spread of economic, technological, and military power to multiple countries and actors fuels a new round of the global arms race. Unlike previous power dynamics defined by deterrence weapons, the next decade may be determined by devastation from precision attacks and expanded conflicts. Global military spending as a percentage of GDP is increasing. For instance, India proposed a defence budget of $5.94 trillion for the 2023-24 fiscal year, a 13% increase from the previous year (DAWN, 2023). Similarly, the US defence budget for 2023 is proposed to be $813 billion, a 4% up from last period estimates (Libermann, Kaufmann, & Herb, 2022). This can augment the proficiency of autonomous weapons, cyber warfare and defensive capabilities and escalate insecurity between global and regional authorities by driving a race towards attaining colossal military power.
The expansion of more lethal and high-tech military weapons with a broader range of adversaries may pave the way for new forms of asymmetric warfare and a rise in rouge actors, allowing smaller powers and individuals to have a greater influence on a national and global scale. For example, biotechnology advancements could allow small groups or even individuals to create pathogens. This can increase the vulnerability of states and fuel migration, corruption and violence that can transcend borders. These technologies will expose populations to direct domestic threats designed to disrupt societal functioning at the local and national levels. These include the physical and virtual impinging of vital resources and services, such as agriculture and water, financial systems, public security, transportation, energy, domestic, space-based, and undersea communication infrastructure.
Economic Instability
Debt vulnerabilities have risen and are likely to stay high for years due to the rapid and widespread normalisation of monetary policies, a stronger US dollar, and a lower-risk sentiment. Emerging market banks like Pakistan, Turkiye, and Egypt have a larger proportion of domestic public debt and exhibit a heightened risk of default, increasing the risk of financial distress spreading to banks, households, and pension funds (World Economic Forum, 2023). For instance, Pakistan owes a debt of approximately $100 billion and must repay foreign lenders $21 billion during the fiscal year 2023. Over the next three years, it will be required to return similar or larger amounts each year, totalling approximately $70 billion (DAWN, 2023). This results in growing calls for developed economies to intervene bilaterally, which will escalate geopolitical tensions in the long run. For instance, China has become a significant bilateral creditor to many developing nations (World Economic Forum, 2023).
Consequently, soft power strategies might be renewed, and debt-trap diplomacy may redraw regional and international political boundaries, forming currency blocs and possibly increasing pressure on developing nations to reconsider economic alliances. This trend may also destabilise security dynamics, as debt is used to draw developing economies into the military expansion of larger powers. Moreover, future investments will also be impacted by debt distress and restructuring. Developed economies will have more freedom to invest in future priorities. In contrast, developing nations may be more heavily indebted to creditor demands, which means money may be diverted away from areas of social need, increasing poverty and inequality within countries and accelerating social and political unrest. For instance, Pakistan’s cumulative education expenditure in the financial year 2020-21 was 1.77 per cent of GDP against 1.9 per cent in 2019-20 (Pakistan Economic Survey 2021-2022, 2022).
The Way Forward
To reduce global climate change, local adaptation and community resilience at a global scale should be prioritised with a focus on biodiversity preservation, altered land management practices, enhancing biocultural conservation, indigenous community management, and integration of traditional knowledge into food production and cultivation can provide dual socioeconomic and environmental benefits.
Public health agencies, healthcare providers, and funders must improve interactions and coordination among all areas of the health system to exchange information, expand capacity, and improve overall population health.
Health systems must innovate in care delivery, staffing and funding models to provide disease prevention, early detection and complex care economically for an increasingly frail and chronically ill population.
Transnational cooperation is required to regulate new weapons technologies to control proliferation and usage.
Timely and substantial debt write-downs could hasten the return to developmental progress and reduce the likelihood of future default for developing nations.
The private sector could be encouraged to participate in debt restructuring through several mechanisms, such as issuing new bonds with stronger legal protections, loss reinstatement commitments, and value recovery instruments.
Conclusion
The global landscape is transitioning rapidly, giving rise to new challenges within and across borders. This might jeopardise the social, economic, and political spheres of low-income economies like Pakistan. The country is already struggling due to mounting debts, climate change, high inflation and political polarisation. The upcoming risks may further impede development and contribute to a bleak future for Pakistan. Therefore, immediate global collaboration and actions are required on all fronts to lessen the magnitude of future risks.
References
DAWN. (2023, January 14). Debt repayment problem. Retrieved from DAWN: https://www.dawn.com/news/1731553
DAWN. (2023, February 1). India raises defence budget to $72.6bn amid tensions with China. Retrieved from https://www.dawn.com/news/1734775
Fayaz. (2021, December 16). Times Agriculture. Retrieved from timesagriculture.com: https://timesagriculture.com/agriculture-problems-in-pakistan-their-causes-and-solutions/
Libermann, O., Kaufmann, E., & Herb, J. (2022, March 8). Biden administration proposes larger defense budget to counter China, Russia. Retrieved from CNN: https://edition.cnn.com/2022/03/28/politics/defense-budget-biden-administration/index.html
(2022). Pakistan Economic Survey 2021-2022. Islamabad: Finance Division Government of Pakistan. Retrieved from https://www.finance.gov.pk/survey/chapter_22/Economic%20Survey%202021-22.pdf
World Economic Forum. (2023). The Global Risks Report 2023 18th Edition. World Economic Forum. Retrieved from https://www3.weforum.org/docs/WEF_Global_Risks_Report_2023.pdf?_gl=1*uteouq*_up*MQ..&gclid=CjwKCAiAuOieBhAIEiwAgjCvcrej9UztGRZN7AyUzXPPRuXchayP6BAvKj6aeOzQfRFGrfAAK3uuqBoCnbYQAvD_BwE
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