How megatrends shape our evolving future

Shocks and crises surround us. Listen to a news broadcast, pick up a newspaper, or open a topical website, and we are bombarded by accounts of fires, floods, wars, economic problems and health scares. 

Yet shocks and crises are discrete events, often with immediate impact such as houses burning down and cars floating down rivers. Such events differ from long-term trends, which are movements or directions, and they differ even more from megatrends.

Understanding megatrends and their long-term impacts on society  

“Megatrends are systemic and often gradual forces that impact our lives in ways that are different from the sudden impact caused by crises and shocks,” says Michael Kitson, Associate Professor in International Macroeconomics at Cambridge Judge. “Such shocks usually call for an immediate reaction, such as the global vaccination effort triggered by the COVID-19 pandemic. Megatrends, in contrast, are global forces such as climate change and inequality that usually need a longer-term response.”  

Research by Michael and colleagues focuses on how such megatrends – and their interaction with crises, shocks and other events – impact regions, cities and countries, and what policymakers can do to respond to these challenges.  

“A city or a region or a country doesn’t cause megatrends, but local mayors and other officials nonetheless face the duty of responding to these huge challenges and adapting to them,” says Michael.  

“The megatrend that many people have focused a lot on in the past decade or so is climate change. In the past few years, the ramifications of AI (artificial intelligence) have been centre-stage, and even more recently the world is changing due to global politics including the re-election of Donald Trump and the re-emergence of protectionism and trade wars,” he says. 

The interactions of megatrends are explored in a special issue of the Cambridge Journal of Regions, Economy and Society, with an introductory article co-authored by Michael. The issue includes articles by experts ranging from historians to city planners to behavioural scientists. While there have been previous issues of the journal that explore the local or spatial impact of global issues (including inequality, China’s belt and road initiative, and the consequences of deglobalisation), the special issue on megatrends differs because it centres around “the idea that in today’s turbulent times, many crises and (mega)trends co-exist simultaneously and, crucially, are interconnected”.  

Michael and his co-authors note that while the meaning of a crisis like a raging wildfire is usually very clear to victims and observers alike, the concept of a megatrend is less clearly observable – but this concept is essential to an understanding of our world and the economic forces affecting our societies.

Why governments, businesses and educators need to understand megatrends 

Understanding and addressing global megatrends is essential for businesses, governments and society at large. Michael, who teaches on the Cambridge Judge Executive Education programme, ‘Global Megatrends for Leaders’, underscores the critical role of education in preparing leaders to navigate the complexities of our evolving world. By examining both short-term shocks and long-term challenges, Michael prepares leaders to be able to recognise the opportunities and threats that megatrends, like climate change, AI and global politics, present and adapt their strategies accordingly.

“Megatrends affect businesses and organisations in major ways, and it’s important for business schools to take account of these major shifts because they influence corporate behaviour and strategy, as well as what governments do and how this affects politics, the economy and society more broadly.  

“What’s especially important from a business school perspective is how these megatrends intersect. For example, much of climate change is caused by emissions by richer countries, but the poor suffer especially in the Global South. And all these megatrends are linked to economic growth: we have seen over the past 50 years that people are living longer, women are having fewer children, and there is more inequality in many countries.” 

Does history repeat itself when it comes to megatrends?  

Michael and his academic colleagues who study these megatrends caution not to overstate the idea that the current era is somehow unique in history in having multiple crises overlap and intersect to form megatrends.   

“We all like to think that our own times are special and unique,” says the research. “The idea that the present moment serves as a clear dividing line between an outdated past and an entirely different future is a timeless concept, often expressed throughout history.”  

Yet Michael is fond of a quote attributed to American writer Mark Twain – “History doesn’t repeat Itself, but it often rhymes” – to illustrate some of the historical parallels between the 2020s and other times often seen by historians as pivotal.  

“Let’s look at the 1930s,” says Michael. “Trump didn’t invent tariffs: there was the General Tariff in the UK in 1931 and the Smoot-Harley Tariff in the US.” The latter, enacted in 1930, raised tariffs on thousands of imported goods and prompted many other nations to retaliate, worsening the Great Depression due to greatly reduced world trade.  

 “There also are parallels between then and now in a changing world power structure,” says Michael. “There was then the relative decline of the UK and growth of the US, while we are now seeing the rise of China and the relative decline of the West. There were then weak institutions such as the League of Nations (which lasted only from 1920 to 1946), and perhaps we’re seeing this now with challenges facing NATO and the World Trade Organization.  

“History may be rhyming but hopefully it doesn’t rhyme too much,” he says. 

Why megatrends cannot be viewed in isolation  

“The major megatrends shaping our world – technological advancement, demographic shifts, climate change, globalisation and inequality – are deeply interconnected, creating a web of complex dynamics that impacts economic and social outcomes,” the research underlines. “These megatrends should not be viewed in isolation but as interdependent forces that collectively determine the trajectory of global and local development. Understanding their interplay is essential for devising effective strategies to harness opportunities and mitigate challenges.”  

So what are the challenges for local, regional and national policy of these interconnected megatrends? A key aspect of this question lies in the uneven ways in which global megatrends affect regions and countries.  

While the US, Europe and East Asia are hubs for AI, biotechnology and robotics, boosting innovation and economic growth, inadequate digital infrastructure and access to education thwarts many low-income and rural regions. At the same time, many of these well-connected countries face rapid ageing, lower birthrates and shrinking workforces – and this in turn increases pressure on cash-strapped pension and healthcare systems.  

“These megatrends are not the first time in history that there have been multiple huge trends that upset the world order, but what’s new is how interdependent these areas are,” owing in part to the instant communication of the digital era, says Michael. “This interconnectedness creates what we term complex feedback loops, and this has local and regional impacts across many dimensions. 

“What’s also changed is an increase in uncertainty in the past few decades”, says Michael, as shown by the World Uncertainty Index developed in 2022 and based on data from the Economist Intelligence Unit. “This increased level of uncertainty has emerged as a megatrend in itself,” confronting regions and businesses with a more crisis-prone global system. 

Is the future all doom and gloom?  

The research by Michael and other authors concludes on an optimistic note, emphasising that “good or even best practices do exist and not all is doom and gloom” – as evidenced by the attraction of highly skilled people to rural areas during the pandemic that narrowed the urban-rural gap in some regions.  

As historian Peter Frankopan says, in a concluding article of the special journal issue: ”While the evolution of new technologies and of new climatic patterns present enormous risks, they also bring with them extraordinary opportunities for innovation, for discovery, for problem-solving, even for hope – since necessity, after all, is the mother of invention”.

“So, yes: these are unprecedented times, because time never stands still and because no 2 periods are ever the same. And yes: this could be described as a time of polycrisis, but only in so far all periods are times of polycrisis: we know that from the 20th century, when the 1910s, 1920s, 1930s (and onwards) all presented challenges as never before.  

“But so too were the 1310s, 1320s, 1330s (and onwards) times of difficulty and challenge – in this case because of climate shifts, warfare, pandemic disease and more. History teaches many lessons, but one of the most important is that perspective matters. Tomorrow might well turn out to be as bad as the past; but for now, it is worth remembering that things could be a lot, lot worse.”