INTRODUCTION

This monograph contains a brief summary of the proceedings of the Study Group during its last "session" from April 1978 to May 1979. The session was rounded off by a day's seminar and evening debate held on 4 October 1979 which was open to all members of the Society.

At this seminar papers were presented by Study Group members, highlighting the more important conclusions. In one area where there was a difference of opinion, the topic was staged as an evening debate.

The papers presented to the seminar are reproduced in this monograph, together will a brief resume of the discussion.

This monograph does not intend to provide a comprehensive review of the business environment of the future, being confined to those areas which the Group studied. However, taking together with the first monograph, it does provide views of an informed body of corporate planners and forecasters in the UK over quite a wide spectrum of business futures

PROCEEDINGS OVER 1978 -79

In April 1978 the Study Group set up a programme to consider four areas

• International Resource Implications
• Ecology Pressures
• Saturation of Markets
• Social Organisation

International Resource Implications

The conclusion from this was that world economic growth rates will slow down appreciably over the next 20 years.

The Study Group concluded that if materials had satisfactorily been made available during the higher growth rates in the past, there should be no problems over the availability of materials during the lower growth rates of the future. Where there are supply problems, their origin will not be in their availability but in politics. Some mechanisms occurring in both of these areas - availability and politics - were presented to the seminar by Dr R H G Whaley.

Ecological Pressures

The concept was seen that the advanced societies were effectively running out of space - and not just physical space.

Thus the freedoms of one person would increasingly encroach on the freedoms of another. This was the basic problem behind ecological pressures

Lower economic growth seen in the future was not seen as reducing concern in this area. More complex technology and sophisticated cost benefit analysis enabled more ecological problems to be measured and monitored, and therefore more issues would be raised. Absence of knowledge of the effects of many processes or technology is likely to cause opposition even when it was unjustified.

Widening of professional protest skills will further increase the ecology movement. The effect on business is reviewed in the paper presented by John Elkington.

Saturation of Markets

Economic growth and market growth were not necessarily the same thing. Undoubtedly certain markets grow and reach a plateau - but one group thought this was just the product cycle concept - and was just an ordinary marketing problem.

Another group thought the future period would produce a different pattern from the past - with many markets showing a saturation feature.

It was difficult to obtain a definition of saturation. Because of the difference of opinion a debate was staged on the evening of the seminar. The position of the two sides is set out in more detail in the papers.

Social Organisation

Some of these considered were

• limits of taxation are being reached - which induces many to try and survive outside the systems, in the form of the hidden or underground economy;
• pressures for self-expression will make management of firms more difficult, and continue the trends for industrial democracy. People concerned with an enterprise will seek to become stakeholders in one form or another;
• there are changing politics. Increasingly the activities will be towards pressure groups for specific objectives - rather than party politics. The specific objectives will probably local issues;
• there will be an increasing interdependence of nation states as they coalesce into larger trading blocks.

SEMINAR PAPERS: BUSINESS ENVIRONMENT 1980s

INTERNATIONAL GROWTH RATES

Dr R H G Whaley

Director, Planning & Control Investments Limited

The Environmental Assessment Study Group carried out a Delphi-type exercise to consider what international growth rates may be over the next 20 years. This was undertaken by:

1. Considering the factors which may effect economic growth (Table 1).

2. Combining these into a matrix, which enables participants to rate the importance of each factor, and add their own.

3. For each of the 16 areas of the world (Table 4), participants gave a score to each factor - for both the last 20 years and for the next 20 years. Participants also ranked their competence for each area (examples Table 2)

4. A further matrix was used to analyse the results which took into participants' competences (examples Table 3)

5. Two rounds were held for the advanced areas of the world, and one round for the others.

Eight people took part, although not everyone attempted all the areas of the world.

The results for the last twenty years were used to validate the procedure, by comparing the Growth Scores with known growth rates. However, the study group concluded that outside the OECD countries there were no reliable statistics (largely because accurate allowance for inflation is generally not made). While in the future even major OECD figures will be increasingly suspect (due to the underground economy).

The graph in Table 5 shows the results for the advanced countries. Changes in growth rates for other areas of the world are deduced from changes in the Growth Scores. (Table 6)

Desire for growth - largely cultural. Probably similar throughout the Western world, low in simple food gathering tribes.

Knowledge and Creativity - the depth to which knowledge and technologies known to man exist within a society and the capacity (both institutional and individual) to create new ones. Societies without the full range must buy the knowledge off others - and learn not to abscond without paying (eg: UDC who confiscate foreign subsidiaries) if they wish to go on growing.

Risk Resources - growth requires new things developed, which in turn is a trial and error process needing risk resources and people prepared to take risks; the numbers of rich people with risk resources and institutions prepared to back risk ventures - and their coupling with people with ideas.

Variety - the trial and error process will produce more new developments the more people who take part in it. Conversely if economic power is concentrated in a few hands (in the extreme in the single hand of the State) less new developments can be expected. (There is also a theory that large organisations will continue longer with misconceived things than will small ones.)

Stability - commerce will only flourish in stable, safe, condition. Violence weakens trade and may make it impossible. Violent swings in economic activity weakens the feedback coupling between demand and supply, reducing investment and growth - such swings accompany high money supply growth and inflation.

Freedom versus oppression, extortion, theft - For much of man's history he has lived under conditions of military feudalism, where a small group has enslaved the bulk of the people and secured a high standard of living by effectively stealing their output. Clearly economic growth can only occur under conditions of freedom, the right to bargain - history suggests mass markets cannot develop without Trade Unions. The more the governing group sequestrates economic output for its own use, the more will be the waste, the lower will be the growth.

Management - the ability to organise rationally, analyse issues, to make investments which produce more than they consume. Clearly this is a variable quantity amongst individuals and peoples. The absence of a Byzantine culture - where status and maintenance of the status-quo are more important than rationality. The ability to be commercial minded, to recognise whether or not one is competitive or has bargaining power, to insure that one gets paid (otherwise others will benefit from your efforts, but you will not).

Bargaining Power - all members of the community are free to bargain. The extent to which the community is self-sufficient or produces things which outsiders wish to buy. A community running an extended trade deficit cannot grow significantly - it eventually loses credit worthiness

(May need Medium Text setting)

1. EXAMPLE	LAST	20	YEARS	-	-	¦ ¦	NEXT	20	YEARS	-	-
Estimates entered where ? C = Calculation entered.	Importance in Producing Economic Growth		Score for this part of the World	-	-	¦ ¦	Importance in Producing Economic Growth		Score for this part of the World	-	-
Desire or aspiration for Growth	?	x	?	=	C	¦ ¦	?	x	?	=	C
Knowledge & Creativity	?	x	?	=	C	¦ ¦	?	x	?	=	C
Risk Resources	?	x	?	=	C	¦ ¦	?	x	?	=	C
Variety	?	x	?	=	C	¦ ¦	?	x	?	=	C
Stability	?	x	?	=	C	¦ ¦	?	x	?	=	C
Freedoms v. Oppression	?	x	?	=	C	¦ ¦	?	x	?	=	C
Management	?	x	?	=	C	¦ ¦	?	x	?	=	C
Bargaining Power	?	x	?	=	C	¦ ¦	?	x	?	=	C
Other factors (specify) Social & Political Cohesiveness	?	x	?	=	C	¦ ¦	?	x	?	=	C
ADD UP THE FIRST AND LAST COLUMNS:	C	-	-	+	C	¦ ¦	C	-	-	+	C
THEN DIVIDE FIRST FIGURE INTO THE SECOND GIVING GROWTH SCORE:	-	-	-	+	C	¦ ¦	-	-	-	+	C

Rate your competence to judge: ?

A Participant	LAST	20	YEARS	-	-	¦ ¦	NEXT	20	YEARS	-	-
1. NORTH AMERICA	Importance in Producing Economic Growth		Score for this part of the World	-	-	¦ ¦	Importance in Producing Economic Growth		Score for this part of the World	-	-
Desire or aspiration for Growth	10	x	9	=	90	¦ ¦	10	x	7	=	70
Knowledge & Creativity	10	x	10	=	100	¦ ¦	10	x	10	=	100
Risk Resources	7	x	9	=	63	¦ ¦	7	x	7	=	49
Variety	5	x	10	=	50	¦ ¦	5	x	9	=	45
Stability	6	x	8	=	48	¦ ¦	6	x	7	=	42
Freedoms v. Oppression	6	x	8	=	48	¦ ¦	6	x	7	=	42
Management	6	x	6	=	36	¦ ¦	6	x	7	=	42
Bargaining Power	4	x	8	=	32	¦ ¦	4	x	7	=	28
Other factors (specify) Social & Political Cohesiveness	8	x	8	=	64	¦ ¦	8	x	7	=	56
ADD UP THE FIRST AND LAST COLUMNS:	62	-	-	+	531	¦ ¦	62	-	-	+	474
THEN DIVIDE FIRST FIGURE INTO THE SECOND GIVING GROWTH SCORE:	-	-	-	+	8.6	¦ ¦	-	-	-	+	7.6

Rate your competence to judge: 8

A Participant	LAST	20	YEARS	-	-	¦ ¦	NEXT	20	YEARS	-	-
2. UK	Importance in Producing Economic Growth		Score for this part of the World	-	-	¦ ¦	Importance in Producing Economic Growth		Score for this part of the World	-	-
Desire or aspiration for Growth	10	x	8	=	80	¦ ¦	10	x	6	=	60
Knowledge & Creativity	10	x	8	=	80	¦ ¦	10	x	7	=	70
Risk Resources	7	x	6	=	42	¦ ¦	7	x	4	=	28
Variety	5	x	8	=	40	¦ ¦	5	x	6	=	30
Stability	6	x	7	=	42	¦ ¦	6	x	5	=	30
Freedoms v. Oppression	6	x	9	=	54	¦ ¦	6	x	6	=	36
Management	6	x	8	=	48	¦ ¦	6	x	6	=	36
Bargaining Power	4	x	8	=	32	¦ ¦	4	x	8	=	32
Other factors (specify)	8	x	8	=	64	¦ ¦	8	x	7	=	56
ADD UP THE FIRST AND LAST COLUMNS:	62	-	-	+	482	¦ ¦	62	-	-	+	378
THEN DIVIDE FIRST FIGURE INTO THE SECOND GIVING GROWTH SCORE:	-	-	-	+	7.8	¦ ¦	-	-	-	+	6.1

Rate your competence to judge: 10

A Participant	LAST	20	YEARS	-	-	¦ ¦	NEXT	20	YEARS	-	-
3. W. EUROPE	Importance in Producing Economic Growth		Score for this part of the World	-	-	¦ ¦	Importance in Producing Economic Growth		Score for this part of the World	-	-
Desire or aspiration for Growth	10	x	10	=	100	¦ ¦	10	x	7	=	70
Knowledge & Creativity	10	x	9	=	90	¦ ¦	10	x	9	=	90
Risk Resources	7	x	7	=	49	¦ ¦	7	x	6	=	42
Variety	5	x	7	=	35	¦ ¦	5	x	7	=	35
Stability	6	x	9	=	54	¦ ¦	6	x	7	=	42
Freedoms v. Oppression	6	x	10	=	60	¦ ¦	6	x	8	=	48
Management	6	x	9	=	54	¦ ¦	6	x	8	=	48
Bargaining Power	4	x	9	=	36	¦ ¦	4	x	9	=	36
Other factors (specify)	8	x	8	=	64	¦ ¦	8	x	6	=	48
ADD UP THE FIRST AND LAST COLUMNS:	62	-	-	+	542	¦ ¦	62	-	-	+	459
THEN DIVIDE FIRST FIGURE INTO THE SECOND GIVING GROWTH SCORE:	-	-	-	+	8.7	¦ ¦	-	-	-	+	7.4

Rate your competence to judge: 9

A Participant	LAST	20	YEARS	-	-	¦ ¦	NEXT	20	YEARS	-	-
4. JAPAN	Importance in Producing Economic Growth		Score for this part of the World	-	-	¦ ¦	Importance in Producing Economic Growth		Score for this part of the World	-	-
Desire or aspiration for Growth	10	x	10	=	100	¦ ¦	10	x	7	=	70
Knowledge & Creativity	10	x	7	=	70	¦ ¦	10	x	9	=	90
Risk Resources	7	x	7	=	49	¦ ¦	7	x	7	=	49
Variety	5	x	7	=	35	¦ ¦	5	x	7	=	35
Stability	6	x	9	=	54	¦ ¦	6	x	7	=	42
Freedoms v. Oppression	6	x	9	=	54	¦ ¦	6	x	7	=	42
Management	6	x	10	=	60	¦ ¦	6	x	9	=	54
Bargaining Power	4	x	6	=	24	¦ ¦	4	x	8	=	32
Other factors (specify)	8	x	10	=	80	¦ ¦	8	x	7	=	56
ADD UP THE FIRST AND LAST COLUMNS:	62	-	-	+	526	¦ ¦	62	-	-	+	470
THEN DIVIDE FIRST FIGURE INTO THE SECOND GIVING GROWTH SCORE:	-	-	-	+	8.5	¦ ¦	-	-	-	+	7.6

Rate your competence to judge: 6

Table 3

Matrix combining Participants' Scores

NORTH AMERICA	Participant's Competence	¦	Participant's Growth Score Last 20 years	¦	¦	¦ ¦	Participant's Competence	¦	Participant's Growth Score Next 20 years	-	-
Participant 1	10	x	8.2	=	82.0	¦ ¦	10	x	6.6	=	66.0
Participant 2	8	x	8.6	=	68.8	¦ ¦	8	x	7.6	=	60.8
Participant 3	9	x	8.3	=	74.4	¦ ¦	9	x	6.6	=	59.4
Participant 4	4	x	8.7	=	34.8	¦ ¦	4	x	8.2	=	32.8
Participant 5	5	x	8.6	=	43.0	¦ ¦	5	x	7.7	=	38.5
Participant 6	10	x	9.3	=	93.0	¦ ¦	10	x	5.1	=	51.0
Participant 7	3	x	9.4	=	28.2	¦ ¦	3	x	8.5	=	25.5
Participant 8	8	x	8.7	=	69.6	¦ ¦	8	x	8.1	=	64.8
Add up 1st, 3rd, & 5th columns	57	-	-	+	494.1	¦ ¦	-	-	-	+	428.8
Then divide 1st into 3rd & 6th Giving growth scores:	-	-	-	+	8.67	¦ ¦	-	-	-	+	7.52

1. N. America	2. UK	3. W. Europe	4. Japan	5. Australia	6. S. Africa	7. Soviet Satellites	8. USSR
9. Mediterranean	10. N. Africa	11. Mid-East	12. China	13. India	14. S America	15. Indo-China	16. Africa

A possible form of relationship between our Growth scores and GDP Growth

AVERAGE GROWTH P.A.
OF GDP
%

Figures in brackets are the Growth Scores resulting from the Delphi
LAST 20 YEARS (1978)	Increase or decrease -> in growth	NEXT 20 YEARS
______________________	__________________	________________	________________
LOW GROWTH	Africa (4)	small increase	Africa (4.3)
less 2% pa	N. Africa (4.5)	small increase	N. Africa (4.9)
Growth Score	China (4.8)	increase	China (5.6)
less 6.5	India (5.2)	increase	India (5.8)
"	Soviet Satellites (5.5)	same	Soviet Satellites (5.6)
"	S. America (5.8)	increase	S. America (6.6)
"	Indo-China (5.9)	small decrease	Indo-China (5.7)
"	Middle East (5.9)	small decrease	Middle East (5.8)
"	USSR (5.92)	same	USSR (5.96)
"	Mediterranean Countries (6.06)	same	Mediterranean Countries (6.1)
MEDIUM GROWTH	UK (7)	decrease	UK (6.7)
2% - 5% pa	S. Africa (7.4)	large decrease	S. Africa (6.3)
Growth Score 6..5 - 8.75	Australia (7.8)	decrease	Australia (7.3)
"	W Europe (8.1)	large decrease	W. Europe (7.3)
"	N. America (8.5)	large decrease	N. America (7.5)
HIGH GROWTH	Japan (8.7)	large decrease	Japan (7.9)

All the developed world is forecast to show sizeable reduction in economic growth rates - but they will probably still be growing faster than the rest of the world. While some areas show small to moderate increases in growth, these are not sufficient to catch up with the West. Some areas also show decreased growth rates.

The Communist block is seen as proceeding at about the same growth rates. South America may increase theirs along with China and India.

In terms of the enclosed Table 6 defining Low, Medium, and High growth rates, there are not many changing in the rankings. Japan drops out of the High Growth into the Medium Growth category, but still remains the fastest growing area of the world.

South Africa drops out of the Medium Growth category, while South America is the only area to join this category.

DISCUSSION IN SEMINAR AND DEBATE

Growth Rates and Resource Implications

Discussion followed that in the Study Group over what economic growth rates actually measure. Economists hoped the Seminar would have discussed the question of growth from economic principles - whereas the Delphi exercise had not used economic principles. There was no answer to the challenge that economic theory had very little to say about what caused longer term economic growth.

There was little disagreement to the conclusion that any problem with the supply of materials will have their origin in politics and not in physical availability.

Ecological Pressures and Social Organisation

After two long papers there was little time for discussion. But there did not appear to appear to be any decension from the principal themes of the speakers.

Debate

Mr Alec Finlay, in the Chair, said he would not take a formal vote; but the contributions from the floor tended to support the proposition of Derek Done that general saturation of all markets would not occur in the foreseeable future.

Conclusion

Overall, the Seminar had endorsed the conclusions of the Study Group.

Contrary to much public debate, problems with physical materials were not seen, except in so far as they were occasioned by politics.

Instead, increasing problems were seen from ecological sources - causing delays, modifications to plans, and greater expense in business carrying out their activities - and mounting and changing pressures from people working within business.