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What Will the Future Hold for Arctic Economics?

By Rachel Gosnell

Introduction

The economic potential of the Arctic is vast, but the complexities of the region must be considered when analyzing the future of the Arctic. While the region north of the Arctic Circle is commonly viewed as a singular expanse, the reality is rather different. Within the Arctic – and amongst the eight Arctic nations – there exists noteworthy similarities but also tremendous variations. Indeed, the Arctic is a diverse part of the world that would be best characterized as several different subregions, all with unique resources, populations, accessibility, geostrategic importance, and challenges. It is critical to analyze economic drivers and political factors across the High North in order to evaluate the economic potential of the region, understand national security interests, and develop appropriate Arctic policy.

A Challenging Environment

One constant throughout the Arctic region is the hostile climate. Record setting cold, ice-covered waters, rapidly emerging storms, and high winds define the region. The warming trends of the High North, which the National Oceanic and Atmospheric Administration (NOAA) note are about double the rate of global warming trends, are of such a magnitude that the pace of sea ice decline and surface ocean warming is unprecedented. This warming is contributing to an alarming decline in ice coverage at sea and permafrost ashore. The warming trends are forecasted to continue at an increasingly rapid rate due to the albedo effect, making Arctic weather more unpredictable as the likelihood of fog, storms, and even ice floes rises in upcoming years. All Arctic states must confront these challenges and share a common interest in conducting research to better understand the scientific trends that are emerging in the region.

The majority – nearly half – of the Arctic’s four million inhabitants live in the Russian Arctic, with the largest communities located in Murmansk and Norilsk. These cities dwarf the largest comparable North American communities, though population trends indicate a slight shift toward growth in the Alaskan and Canadian Arctic. Yet the Arctic population in total is predicted to experience only a slight upward growth in the upcoming decades, with just a 4 percent growth rate predicted through 2030. When compared with the global growth rate projection of 29 percent over the same period, it becomes clear that the region will not becoming a booming source of labor. Indeed, the Business Index North 2018 report notes that many cities in the Arctic are confronting challenges stemming from the loss of the region’s youth – who move south in search of education and jobs – and a gender imbalance. Further, as the Arctic warms, attracting interest to the region, the indigenous communities are facing new challenges. Thawing permafrost is causing damages to infrastructure as the ground becomes less stable. Developing new infrastructure to support economic development will require innovative approaches in a region not experienced in such issues. The logistical difficulties of transporting building materials and expertise will further compound the issue. 

The warming trends, however, will certainly enable further economic activity in the region. Diminishing sea ice coverage is enabling greater maritime traffic. However, it remains unlikely that the northern routes will become competitors of the Suez Canal despite the difference and significantly shorter distance (approximately 4,700nm) from Northern Europe to East Asia that amounts to a decreased transit time of 12 to 15 days if weather conditions cooperate. Yet of the primary identified shipping routes through the Arctic – the Northern Sea Route (NSR), Northwest Passage (NWP), and Transpolar Route (TPR) – only the NSR will have extended periods of opening through approximately 2025. 

Map of the Arctic region showing shipping routes Northeast Passage, Northern Sea Route, and Northwest Passage, and bathymetry (Wikimedia Commons)

New Opportunities 

Shipping companies and countries alike are exploring the potential new trade routes. Putin has exclaimed that the Northern Sea Route will rival international trade lanes and indeed, there has been an increase of vessel activity in the region. In 2017, the Northern Sea Route Administration (NSRA) issued 662 permissions to vessels for navigation along the NSR, though only 107 of these for foreign (non-Russian) flagged vessels. During that year, the NSRA notes that 9.74 million tons of various freights were transported by vessels, though mostly between ports located along the NSR. Indeed, in 2017, there were only 24 vessels and 194,364 tons of cargo that transited the duration of the route – much less than the record high in 2013 when China’s COSCO and others sent cargos through to explore the possibility of a maritime route. That year, aided by exceptional weather conditions, 71 vessels and 1.36 million tons of cargo transited the Northern Sea Route. Yet this still pales in comparison to the Suez Canal traffic, which saw more than 17,600 vessels and 1.04 billion tons of cargo in 2017.

Weather and vessel size limitations – due to reduced water depths and widths limited to icebreaker accompaniment – will reduce the efficiencies of the commercial shipping industry, which values economies of scale and the just-in-time shipping model. Arctic shipping in its current state is not yet reliable enough to adhere to these requirements, although when the Transpolar Route opens it may become more appealing. China has already looked northward to link the “Polar Silk Road” to its broader One Belt One Road Initiative. Yet weather will remain a challenge, with unpredictable ice floes moving into vessel routes, harsh storms, and cold operating temperatures. The International Maritime Organization’s Polar Code was a solid effort to improve safety and establish training and operating standards for vessels in the Arctic, but it will likely need continuous updates to remain relevant. International coordination on Arctic maritime safety and emergency response will be critical to ensuring the prevention – or expeditious response – of a maritime crisis. Given the fragility of the environment, hostile conditions, and dearth of emergency response capabilities in the Arctic, cooperation will be critical to the future.

Another significant economic driver for the region is the abundant presence of energy both on shore and within the exclusive economic zones of the five Arctic coastal nations. Several countries have already submitted claims to further extend their claims under the Commission on the Limits of the Continental Shelf. This includes a number of overlapping claims, to include the Lomonosov Ridge – and the North Pole. Although the United States remains the sole Arctic nation that has not ratified the United Nations Convention on the Law of the Sea (UNCLOS) it appears that all Arctic nations will submit claims in accordance with UNCLOS. Yet the review of such claims make well take years due to the backlog of the Commission and the complexity of the review process. Until then, there remains a potential for disputes over economic resources, although Norway and Russia resolved the biggest dispute in the region peacefully in 2010. Currently the largest disputes in the Arctic are between the United States and Canada.

While oil and gas reserves are still unknown, it is estimated that the Arctic may hold nearly one-third of the world’s natural gas and thirteen percent of global oil reserves. Yet costs of exploring, developing, and extracting these resources are very high given the harsh environment, limited infrastructure, and difficulties posed. Given the current market prices, there is limited interest in pursuing these reserves in North America, though Norway and Russia are continuing development in the Barents and Kara Seas. The Chinese Nanhai-8 rig made an April 2018 discovery that may rank the Leningradskoye field as one of Russia’s largest natural gas fields. Indeed, China has also invested in the Yamal LNG project, which has ownership of 50.1 percent by Novatek, 20 percent by total, 20 percent by China National petroleum Company, and 9.9 percent by the Chinese Silk Road Fund. Production officially began in December 2017 and officials predict an annual production of up to 360 billion cubic meters of gas. The new Christophe de Margerie class of icebreaking LNG carriers – projected to be a total of 15 vessels at more than $300 million apiece – has commenced deliveries from Yamal to Asia. While the transit shipping of cargo may not be viable for decades, it is clear that Russia is intent on using the Northern Sea Route to ship commodities to market, albeit on a small scale when compared to the global maritime industry. Overall production of Arctic energy reserves will likely remain limited in the near future, unless the price of oil climbs significantly. Other sources of oil and gas – to include shale and using newer technology on older fields – will continue to remain a more economical option.

Mineral resources are also found in vast quantities throughout the Arctic, with all Arctic nations except Iceland possessing significant mineral deposits. While some new deposits are being revealed as ice coverage melts, it is likely that development in the near term will continue to focus on existing mines. It is predicted that infrastructure to these mines and areas will steadily be improved to permit future access.

Changes in climate are also likely to result in increased fishing in the Arctic. While there is little data on exact sizes of Arctic fishing stocks, it is likely that fish will continue migrations northward as the waters warm in the south. International fishing fleets will follow these fish, and the level of illegal and unreported fishing will likely rise due to the challenges of monitoring the vast region and lack of comprehensive maritime domain awareness. Yet this is also another opportunity for the Arctic coastal states to work together, in regulating and monitoring fishing. Likewise, the regulation of tourism in Arctic water – and the establishment of clear safety and emergency response protocols – will require cooperation from the Arctic states as the numbers of tourists rise. Indeed, the 2016 and 2017 Northwest Passage transits of the Crystal Serenity cruise ship and 1,800 passengers (900 guests) highlight the importance of developing both regulations and crisis response procedures as the adventure tourism industry continues to grow.

A final economic factor in the Arctic will be foreign direct investment. To date, the Arctic has received significant levels of FDI, with China being the largest source at an estimated $1.4 trillion invested into the economies of the Arctic nations from 2005-2017. Concerns arise over the potential for externalities associated with this investment, particularly given China’s record on labor and environmental issues. China’s recent Arctic White Paper establishes that China will continue to seek investment and other economic opportunities in the region. 

Conclusion

The Arctic is brimming with economic potential. Though the population will continue to be a small fraction of the global population, the region has significant natural resources and potential as a maritime trade route. With an annual economy presently exceeding $450 billion, it is likely that the region will experience further growth as the Arctic becomes increasingly accessible. Yet Arctic states must carefully regulate this growth in order to ensure protection of the environment, indigenous peoples, and their own strategic interests. This will further require significant cooperation amongst the nations of the High North – and those with interests in the region – in order to ensure the development and adherence to protocols and regulations that guide economic development. 

Rachael Gosnell is pursuing doctoral studies in International Security and Economic Policy at the University of Maryland, with a focus on maritime security in the Arctic. She holds a MA in International Security Studies from Georgetown University, a Masters in Engineering Management from Old Dominion University, and a Bachelors of Science in Political Science from the U.S. Naval Academy. She currently teaches Political Science at the U.S. Naval Academy. All views expressed are her own and do not reflect the U.S. Department of Defense or the U.S. Naval Academy.

Featured Image: Helicopter view of U.S. Coast Guard Cutter Healy (bottom left) stopped in the Arctic Ocean as Canadian Coast Guard Ship Louis S. St. Laurent (top right) comes alongside it. (Jessica K. Robertson/Public Domain)

Deglobalization Will Change the Mission of Naval Forces

The following article is adapted from a report for the Institute for International Strategic Studies at the National Defense University, International Studies, Will Technological Convergence Reverse Globalization?

By T. X. Hammes

Since the end of World War II, the United States has consistently supported greater global integration. U.S. leaders saw this as the route to both prosperity and security. After the shock of Korea, the United States consistently forward deployed its armed forces to support this policy. The following decades of increasing global trade seem to validate this strategy. However from 2011 to 2014, manufacturing trade as a percentage of GDP actually flattened and then declined from 2011 to 2014. Services and financial flows followed the same pattern. In its 2016 report, Mackenzie Global Institute reported, “After 20 years of rapid growth, traditional flows of goods, services, and finance have declined relative to GDP.”

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Figure 11

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Many analysts contend these are short term trends and soon trade will resume growing. In contrast, this article will argue that the convergence of new technologies is dramatically changing how we make things, what we make, and where we make them. These technologies plus trends in energy production, agriculture, politics, and internet governance will result in the localization of manufacturing, services, energy, and food production. This shift will significantly change the international security environment and in particular the role of the U.S. naval forces.

How We Make Things

The cost advantages derived from the combination of robotics, artificial intelligence, and 3D printing is driving production to automated factories. According to Boston Consulting Group, about 10 percent of all manufacturing is currently automated, but this will rise to 25 percent by 2025. This is only the very front end of the shift of labor to automation. A Price Waterhouse Cooper survey showed 94 percent of CEOs who had robots say the robots increased productivity.

Even as robots are changing traditional manufacturing, 3D printing, also known as additive manufacturing, is creating entirely new ways to manufacture a rapidly expanding range of products – from medical devices to aircraft parts to buildings. In April 2016, Carbon3D released the first commercial version of a machine that prints 100 times faster than its predecessors.

Commercial firms are exploiting these advances. United Parcel Service established a fully-automated facility with 100 3D printers to manufacture one-off parts or mass produce thousands of the same part. “UPS can see a major change coming. The concept is simple, local production of a vast number of components will hit the international shipping market hard.”

In fact, Price Waterhouse Cooper surveyed over 100 industrial manufacturers and reported that fifty-two percent of the CEOs surveyed expect 3D printing to be used for high volume production in the next 3-5 years. 

What We Will Make

3D printing will have two other major impacts — mass customization and design for purpose. Rather than stocking the wide variety of parts in the spectrum of colors and finishes they use, a range of industries are looking to maintain only digital files and print on demand. More revolutionary, designers can now design an object to optimally fulfill its purpose rather than to meet manufacturing limitations. General Electric replaced jet engine fuel nozzles made from 18 smaller parts with a single, lighter, stronger, longer lasting, and cheaper 3D printed part.

3D printing can also increase the strength of a product through honeycomb construction, like that of bird bones. Very difficult to make with traditional manufacturing, 3D printing can make them with relative ease. Further, 3D printing can create gradient alloys which expand the material properties of the product. 3D printing can actually improve the performance of existing materials. 3D printed ceramics can have 10 times the compressive strength of commercially available ceramics, tolerate higher temperatures, and be printed in complex lattices, further increasing the strength to weight ratio.

Where We Make Things

The combination of robotics, artificial intelligence, and 3D printing means “on-shoring,” returning manufacturing to the home market, is increasing rapidly. In 2015 survey of CEOs, Boston Consulting Group noted

            –a 17 percent increase in the number that report they are actively reshoring now, which is 2.5 times the number actively reshoring in 2012.

            –31 percent would put new capacity to serve the U.S. in the U.S. versus 20 percent who would choose China.  A reversal from 2 years ago when China was favored 30 percent to 20 percent.

            –71 percent believe that advanced manufacturing technologies will improve the economics of localized production.

The trends noted in Boston Consulting Group’s survey are reflected in the reversal of manufacturing job trends over the past two decades. The United States lost manufacturing jobs every year from 1998 to 2009 — a total of 8 million jobs. But in the last six years, it regained about 1 million of them.

Co-location reduces shipping and inventory costs. It also allows closer interaction between design and manufacturing which speeds the design, test, build, employ, and improve cycle. General Electric just finished building an Advanced Manufacturing Works right next to a large manufacturing plant to both take advantage of proximity and learn more about how to maximize that benefit.

Hal Sirkin, an analyst with Boston Consulting, predicts “you’re going to see more localization rather than more scale… I can put up a plant, change the software and manufacture all sorts of things, not in the hundreds of millions but runs of five million or ten million.” The bottom line is that more and more products will be produced locally, which will steadily reduce the need for international trade in manufactured goods.

Service Industries Are Coming Home Too

Service industries are following suit as artificial intelligence takes over more high order tasks. Pairing AI with humans has resulted in lower costs (fewer humans) and higher customer satisfaction for United Services Automobile Association’s call center.

Nor is artificial intelligence limited to routine call center tasks. This year the Georgia Institute of Technology employed a software program named “Jill Watson” as a teaching assistant for an online course without telling the students. All of the students rated Ms. Watson as a very effective teaching assistant. None guessed she wasn’t human. Baker & Hostetler, a law firm, announced it has hired her ‘brother,’ Ross, also based on Watson, as a lawyer for its bankruptcy practice.

Artificial intelligence is already handling tasks formerly assigned to associate lawyers, new accountants, new reporters, new radiologists, and many other specialties. In short, non-routine tasks – whether manual or cognitive – will still be done by humans while routine tasks – even cognitive ones – will be done by machines.  And this is not a new phenomenon, computer technology has been eating jobs since 1990. 

Figure 4 Hammes

With labor costs much less of an issue, better communications links, better infrastructure, more attractive business conditions, and effective intellectual properly enforcement, services are returning to developed nations. The few, more complex questions that require human operators are better handled by native language speakers intimately familiar with the culture. 

Only the First Step?

The changes in manufacturing and services may be only the first step in de-globalization. Electric/hybrid vehicles, alternative energy technologies, and increased energy efficiency are reducing the global movement of coal and oil. While starting from a small base, renewable energy — wind, solar, thermal — is growing very rapidly.  In 2014, 58.5 percent of all new additions to global power systems were renewables. In 2015, 68 percent of the new capacity installed in the United States was renewable. As vehicle fuel efficiency, hybrids, and all-electric vehicles improve, Wood Mackenzie suggests that U.S. gasoline demand could fall from 9.3 million barrels/day to 6.5 million barrels/day by 2035. Fracking, alternative energy, and new efficiencies have already dramatically reduced the U.S. need for imported energy. If other nations can make similar advances in these areas, it will slow and then reduce the global trade in gas and oil.

Agriculture is another area that has seen increased global trade over the last few decades. High value fruits, vegetables, and flowers move from nations with favorable growing conditions to those without. However, indoor farming has begun to undercut this trade by providing locally produced, fresher, organic products. Depending on the product, such farms can produce 11-15 crop cycles per year. A facility in Tokyo produces 30,000 heads of lettuce per day and plans a second plant to produce 500,000 head of lettuce daily within 5 years. Now that the concept has been proven, Japanese firms are putting 211 unused factories into food production.

The industry is not restricted to Japan. A firm in the United States is planning to establish 75 indoor factory farms. Similar urban farms are being built across Europe and Russia. These indoor farms do not require herbicides or pesticides, use 97 percent less water, waste 50 percent less food, use 40 percent less power, reduce fertilizer use, reduce shipping costs, and are not subject to weather irregularities. Scaled-up, these processes will seriously reduce the market for long-range shipping of high value agricultural products. Japanese firms are even experimenting with growing rice in a number of their facilities. 

All of the factors listed above are being reinforced by social pressures to “buy local” to reduce the environmental impact of production. Local production both creates jobs near the consumer and dramatically reduces transportation energy and packaging waste. Indoor farming can almost eliminate the environmental impact of farming on land and waterways.   

A further driver of global fragmentation is the effort by authoritarian governments to segment the internet.  Initially considered an impossible goal, China has steadily improved its ability to control what people can access inside its territory. Totalitarian nations have decided the costs of connectivity exceed the benefits of globalization. Restricted access to the internet will inevitably reduce these nations’ participation in the global economy.

Cumulative Effects

The key question is how much will the sum of shifts in manufacturing, automation of services, localization of power, and food production reduce globalization. Localizing production will dramatically reduce traffic in components and finished manufactured products thus disrupting established trade patterns. Currently we ship raw materials to one country. It puts together the sub-assemblies, packs them, and ships them to another country for assembly. There they complete the assembly and packaging, then ship the packaged product onward to the consuming country. With the emergence of 3D manufacturing, we will ship smaller quantities of raw materials to a point near the consumer, produce them, and then ship them short distances for consumption. Thus reducing international trade. The localization of energy production and return of high value agriculture to developed nations will further reduce global trade.

Other factors are slowing globalization. First, protectionism is growing. Since 2008, more than 3,500 protectionist measures and administrative requirements have been instituted globally. As technology eliminates jobs, the political pressure for protectionism will rise. Donald Trump and Hillary Clinton both oppose the Trans-Pacific Partnership. Its Atlantic counterpart, the Transatlantic Trade and Investment Partnership, is still being negotiated but faces growing political opposition on both sides of the Atlantic. Brexit probably has killed it.

American policy makers and economists still believe global trade is essential. But according to a recent Pew poll, only 17 percent of Americans thought it leads to higher wages, only 20 percent believed it created new jobs. 

Implications for National Security

Since 1945, the United States has pursued globalization for both economic and security reasons. Today, the economic premise of globalization is being challenged by a wide range of political actors. Thus, whichever party wins the next election will likely encourage each of the trends discussed in this paper with tax breaks, trade policy, and administrative actions. The cumulative effect will be to discourage and undermine the case for globalization while potentially strengthening the U.S.-Canada-Mexico trading bloc. Similar pressures may drive nations across the globe to regional trade blocks.

In turn, if globalization no longer has major economic benefits for the United States, then employing U.S. power in an effort to maintain global security will be seen purely as a cost. This will create a very different domestic environment for the practice of U.S. foreign policy. Deglobalization will reduce the American people’s interest in propping up global stability at exactly the time the widespread dissemination of smart, cheap weapons will significantly increase the costs of doing so. Faced with growing social and infrastructure needs, Americans may no longer be willing to underwrite international security with their blood and treasure.

Turning isolationist would reverse over 60 years of American foreign and security policy and radically alter the international security picture. Europeans, already struggling with the implications of Brexit, will have to determine which threat – mass migration or Russian expansion – is the greater one and how they will reach agreement on allocation of security resources. 

Asian nations will also face a very different environment. American presence in Asia has been seen as the major provider of stability and peace for the region. Given China’s recent assertiveness in the South China Sea, the biggest question for Asian nations will be how to prevent Chinese domination. In a region with no history of military security alliances, the challenges will be extensive. Some Asian states have the capability to rapidly develop nuclear weapons and may choose to do so to provide nuclear deterrence. 

Role of Seaborne Trade in a Regionalized World

Deglobalization will take a decade or two and while it will result in major decreases in international trade, it will not eliminate it entirely. From the U.S. point of view, the import of raw materials and the export of bulk energy, food, and manufactured goods will remain economically important. However, maritime strategists should understand the relatively low percentage of U.S. GDP this represents. In 2014, the United States exported over $1.5 trillion of its $18 trillion GDP. Canada and Mexico accounted for about 35 percent of the total, with most of it shipped overland. The other 65 percent was broadly distributed globally. While 75 percent of those exports by weight were seaborne only 33 percent of exports by value were. This means just under 2 percent of the GDP of the United States was exported by sea and just over 3 percent by air. While mariners faithfully repeat the mantra that 90% of U.S. goods travel by sea, we fail to see the relatively low value to our economy. Thus sustaining support for a global Navy in times of reduced budgets and isolationist sentiment will be a real challenge. Nor will the fact that we import $2.2 trillion per year be a useful argument if isolationist tendencies continue to dominate the political sphere.

So What For The U.S. Navy and Marine Corps

A couple of decades may seem adequate time to prepare if isolationism does come about. It is in fact a very short time for the Department of the Navy. Most of the procurement budgets for the next two decades are effectively obligated to existing and planned programs such as the Ford class, the F-35, and the SSBN replacement. Thus the services must think through how their roles and missions may change in such a future.

Maintaining nuclear deterrence will remain the highest defense priority. However, the combined cost of replacing the triad may force the United States to reconsider whether it needs all three legs. The Navy must be prepared to articulate why the submarine leg of the triad remains important – and deal with the concerns about increasing transparency of the oceans.

In an isolationist America, the next highest priority is likely to be defense of the hemisphere or at least the North American trading block (U.S.-Canada-Mexico). This will require an integrated air, sea, and sub-surface defense of the territory and waters of the region. It will also include protection of undersea fiber optic networks. 

A secondary mission will remain the protection of U.S. trade. Even with these increases in manufacturing and energy exports, U.S. exports will likely remain well less than 10 percent of our national economy. Further, these exports will be focused on developed nations in Asia and Europe perhaps reducing the need for naval forces in other regions. Thus the current emphasis on intensive and extensive engagement with navies around the world will be significantly reduced. However, as always, naval forces will often be the force of choice for protection of U.S. facilities or evacuation of U.S. citizens overseas and this will require forward deployed forces.

In an isolationist future, America will not conduct major land campaigns overseas unless absolutely forced to by strategic need. If America chooses to do so, Navy and Marine forces may be the force of choice for initial deployment. The continuance of the small, smart and many revolution means naval forces will have to rethink how they fight. As Professor and retired U.S. Navy Captain Robert C. Rubel noted in 2013,

“Given the increasing sophistication of defenses and the growing expensiveness (and thus smaller numbers) of traditional strike platforms, such as tactical aircraft, the answer to this problem will increasingly involve new kinds of missiles and other unmanned systems. If the Navy, along with the other services, can evolve to a predominantly missile-based, aggression-disruption posture, U.S. influence may be manifested in the inability of unwillingness of dissatisfied power to try to overturn the international order, either regionally or globally, via military means.”

Thus rather than projecting power to dissuade, enemy naval forces might turn to disrupting the opponent’s ability to project power. The convergence of technologies – artificial intelligence, robotics, 3D manufacturing, and drones – will provide thousands of autonomous weapons able to reach out hundreds of miles and even a few that will range thousands of miles. In short, A2/AD will become much more effective and powerful. Fortunately, it can work both ways; strategic geography heavily favors the United States in any contest with China.

A new, old mission may also evolve – Marine Defense Battalions. Developed prior to WWII, they were formed to rapidly establish anti-air and coastal artillery on critical islands. With the exponential increase in range of drones, ASCMs, cruise and ballistic missiles as well as self-deploying sea mines, such forces could create sea denial areas reaching hundreds of miles into the surrounding waters or close maritime chokepoints. These units could be employed in the first island chain to force the Chinese to fight hard if they want to exit the South or East China Seas. Further, they can be used as models for partner and allied nations that wish to build a relatively inexpensive A2/AD capability to raise the cost to China if it attempts to bully them.

Summary

Klaus Schwab, Founder and Executive Chairman of the World Economic Forum writes, “The speed of the current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.”

The 4th Industrial Revolution will unfold over the next couple of decades, bringing amazing advances in manufacturing and services. There is no doubt the global economy will change in many ways. Manufacturing, services, energy, and agriculture all seem to be moving to localized production. The net effect is slowing and may be reversing globalization. Obviously, this is not a certainty but it is a strong possibility supported by technical, social, and political trends. If this is happening, the basic assumptions undergirding sixty years of post-World War II prosperity and security will change too. Thus the fundamental assumptions about the role of the U.S. Navy and Marine Corps must also change. As part of their continuing efforts to understand the future, the services must add this possible future and explore what it means.

Dr. T. X. Hammes is a Distinguished Research Fellow at the U. S. National Defense University. The views expressed here are his own and do not reflect the views of the U.S. government. An extended version of this article is available here

Endnotes

1. World Bank, “Trade ( percent of GDP), http://data.worldbank.org/indicator/NE.TRD.GNFS.ZS/countries/1W-CN-US?display=graph, accessed Mar 29, 2016.

2. World Bank, “Merchandise trade ( percent of GDP), http://data.worldbank.org/indicator/TG.VAL.TOTL.GD.ZS/countries?display=graph, accessed Mar 29, 2016. 

3. Matthieu Bussiere, Julia Schmidt, Natacha Valla,  International Financial Flows in the New Normal: Key Patterns (and Why We Should Care), CEPII, Mar 2016, p.5,  http://www.cepii.fr/PDF_PUB/pb/2016/pb2016-10.pdf, accessed May 26, 2016.

4. Maximiliano Dvorkin, “Job Involving Routine Tasks Aren’t Growing,” St. Louis Federal Reserve Bank, https://www.stlouisfed.org/on-the-economy/2016/january/jobs-involving-routine-tasks-arent-growing, accessed May 25, 2016.

Featured Image: Mariners aboard MSC-chartered cargo ships MV BBC Seattle and MV Marstan conduct cargo operations in Talamone Bay, Italy. (U.S. Navy photo by Matthew Sweeney)

Sea Control 21 – Threat Projection

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Today’s extended episode is a chat on future threat projection with Dennis Smith of the Project on International Peace and Security from William and Mary, Chris Peterson of the Fletcher School’s Neptune Group, and Alexander Clarke of the Phoenix Think Tank. We talk about the next 5-10 years in maritime security, concentrating on global human security, china, and the economy. Please enjoy Sea Control 21- Threat Projection (download).

Remember, we are available on Itunes, Stitcher Stream Radio, and a bunch of other places my Google data can’t identify. Please, leave a comment and a five-star rating so we can get on the front page one day.