ASAE ForesightWorks Drivers of Change: Economic Conditions

economicconditions

Economic trends at both the macro and the micro level will create change across industries, including in the association sector. Governments and large corporations are driving change from the top, while consumers’ purchasing and philanthropic choices suggest individual responses to economic conditions. The drivers of change below explore how economic shifts could affect diverse industries, the workforce, and the associations that represent them.

Cartel Capitalism
Mergers and acquisitions have caused a growing number of industries to be dominated by a smaller number of companies, while in the tech industry, network effects have led to the dominance of firms like Apple, Amazon, and Google. While these firms benefit from economies of scale that cut costs, their dominance can reduce competitiveness and economic dynamism. Additionally, by attracting the best talent, these world-beating firms capture a disproportionate share of productivity growth, contributing to stagnation in the rest of the economy.

Climate Change Resiliency 
The climate change debate is shifting away from large-scale national and international solutions toward practical, smaller-scale actions aligned with particular geographies or industries. Businesses and organizations are exploring ways to mitigate their environmental impact and build their resilience against risks such as business disruption and loss of public support. 

Global Power Shifts
Existing global power structures are breaking down, as new centers arise and power diffuses. Power is shifting among nation-states and flowing to several kinds of transnational and sub-national organizations and groups. This will change the operating environment for associations, especially those with cross-border reach.

Philanthropy Reshaped
Demographic and political changes, loss of trust in institutions, and the growth of donor-advised funds and impact investing will drive shifts in the channels, targets, and geographic focus of American philanthropy. These shifts will offer opportunities for associations to access new resources, engage new members, and create new partnerships.

The Productivity Paradox
In recent decades, growth in economic productivity has failed to match growth rates of the post-World War II era despite exponential advances in computing and the rise of the information economy. Economists are concerned that today’s information technology (IT) innovations are not economically transformational and are unable to support higher rates of productivity growth. Low productivity growth has contributed to a contracting middle class and marginal wage growth for a majority of workers.

The Sharing Economy
The sharing economy—the peer-to-peer exchange of goods and services—will continue to grow globally and expand into new areas of commerce, posing a greater challenge to incumbent firms in many industries. The sharing economy portends a shift in the balance between access and ownership, with owners getting new opportunities to extract rents, and users getting new opportunities to use goods and services with more flexibility. The sharing economy can blur the lines between commercial operations and person-to-person exchanges, creating a growing regulatory challenge.

Trade in Transition
The rules of global trade are up in the air, with growing uncertainty about whether the trend toward global trade harmonization will be maintained. The United States and the United Kingdom have begun renegotiation of once-settled trade policies that supported economic globalization, pushing the world trade system toward greater economic nationalism.