Globalization and Investment

By Glen Hiemstra, 2002

Globalization and the future has been on my mind the last couple of months. This is in part because of the experience of keynoting the National Hotel Congress in San Jose, Costa Rica, then keynoting the 30th Anniversary Partners Conference of Apax Partners in the UK, and yesterday keynoting an annual CEO/CFO conference for the Venture Law Group, here in Seattle.

“For a number of years global tourism has been the largest of all world industries, with growth driven especially by one of the most powerful developments of the last forty years, rapid air travel.”

Apax Partners is the largest private equity VC in Europe, with a global presence. (Ehud Barak, Sir David Frost, Laura Tyson and many other notables were at the anniversary gala.) The CEO’s attending the Venture Law Group event were heavily weighted toward digital and bio technology, as were the VC’s in attendance. The hotels in the Costa Rican Hotel Association range from international destination resorts to small eco tourism properties. Each event asked me to think with them about the future, the global economy, technology and investment opportunities.

For a number of years global tourism has been the largest of all world industries, with growth driven especially by one of the most powerful developments of the last forty years, rapid air travel. It is interesting to consider that, in fact, fast jet airplanes may have had a more profound impact on the world since 1960 than have computers, biotechnology, telecommunications, media, the Web, or anything else. As I have often said, un-invent these other technologies, simply put millions of people on airplanes every day, fly them somewhere else in the world for business or pleasure, do it at jet speed, and you will change the world. Now the question is whether world tourism, world travel, and airplane traffic will continue to grow, particularly in the wake of the downturn of 2001.

The long term answer, I believe, is yes, anticipate significant growth. Three developments have formed a virtuous circle to promote world travel, including growing global incomes, faster or larger planes with more routes, and the global telecom and internet infrastructure. Just a couple of years ago the World Tourism Council was forecasting a tripling of international arrivals by 2020, not to mention domestic travel.

The international travel system is fragile, as we have seen. More terror incidents, or simply an inability to straighten out the tremendous ‘hassle factor’ now built into air travel in the U.S. because of chaotic implementation of security systems, could put off significant growth for some time to come.

Yet the human desire to go, see, and do does not seem likely to diminish. If anything, global media and the Internet make it easier to see where one would like to go, while Internet travel aggregators can make it less expensive and more convenient to go there. Case in point. Our oldest child, now a college graduate who has lived and studied in Germany and Italy at various times (another of our kids recently finished a term in the UK), is making a tourist trip to Spain, Italy, and Greece. A mix-up of paper work made it appear that she needed to overnight in Madrid and wait for a Fedex package, something not planned. While she stood working out flight changes at an airport counter, she was on a cell phone to me, as I was on the Web searching for a hotel in the right district in Madrid, and making a reservation. Then just a few minutes later I used the Web to cancel the hotel when a whole different plan became better. Travel arrangements were made awfully easy, without the need for even a transcontinental call, simple though that would be as well.

Another simple case in point. I began doing futuring workshops more than twenty years ago, and still do them occasionally as my work shifted toward speaking, writing, and consulting. As a means of self-introduction, one of my favorites has been to ask workshop participants to describe the place on earth that they have been that is the furthest distance from where they now sit. Twenty years ago perhaps 30% of a given group would name an international destination. As the years went by, more would do so, until now in virtually any group most everyone will name an international spot, and those who don’t seem somewhat embarrassed not to have been outside the borders of their own country. This is really a profound change. I cannot see it doing anything but continuing in the same trend direction. When you are told that ‘people are going to be staying at home now,’ be careful about believing it, beyond the very short term.

A critical development on the aviation horizon is whether Boeing or another manufacturer builds a faster yet economical plane. For Boeing, it is the ‘Sonic Cruiser.’ In Costa Rica I learned from another presenter who polls travel interests that 25% of Americans dream of going to Australia, but do not because ‘it takes too long’ to get there. If and when it does not take too long, and yet is economically viable, watch for international travel to jump again. For the Central American hotel industry I suggested this would mean an increase in short vacation trips to their locations, or short combined business meeting & vacation trips, travel trends which are otherwise in place already.

All three groups were struck by the case that we have made for the investment potential of the coming eco-economy, particularly the energy and transportation alternatives which will become dominant sooner (our preference) or later (the standard prediction.). Chief among these that I discussed are hydrogen or other fuel cells for buildings and transportation. Perhaps you noted the successful first cross-country drive of the NECAR5, the fuel cell auto from the Ballard Power consortium effort.

Naturally I noted opportunities in digital technology which including alternate display and interaction technologies. Biotech highlights include what is likely to emerge around germ line intervention, along with the urgent need to stave off efforts to ban basic research. Nanotech was the mystery field, even to these sophisticated audiences. The startling successes of the past two years in producing nano materials, particularly nanotubes, coming medical applications, research taking us toward nano computing and nano electronics, and the need to watch for developments in creating exponential assembler techniques were the highlights.

Long term global population decline along with aging of the global population were of keen interest (though the VLG did not have time to get into this). The Europeans are especially beginning to wrestle with both of these trends, as countries on that Continent are among the trend setters. What these trends mean for the labor pool in Europe will be a matter of great significance over the next decade or two. Same for Japan, which will tip over into population decline as soon as 2005.

There was much more, as those of you who have experienced my rather information intense presentations know. In the end, I found myself more attuned to the globe and feeling more focused on looking at the whole thing. If you are interested in learning more, check out some links here. Oh, and read The Lexus and The Olive Tree, if you have not already done so. Really. You will be a lot smarter about globalization when you are finished.

Glen Hiemstra is a futurist speaker, author, consultant, blogger, internet video host and Founder of Futurist.com. To arrange for a speech contact Futurist.com.

Additional Resources

A New Mission for Humanity, in our last newsletter, which describes the eco-economy as investment opportunity and a new mission for humanity.

Germinal Choice Technology, Interview with Gregory Stock, World Future Society

Nanotechnology and Materials, a special section of Technology Review Online

Human Interface Technology Lab, at the University of Washington, a leading research center in augmented reality display and interaction technologies.

World Numbers May Peak in 2100, the BBC take on population decline.

Replacement Migration, Difinitive UN site detailing where population decline happens and when, for example in Japan starting in 2005 under the “mediim” scenario.

Population Explosion Ends in a Whimper, Futurist.com article in 2000 detailing the coming decline.

End of Retirement is Near, Futurist.com article from 1993 & 1999 discussing impacts of aging population.

Boeing Unveils New Product Design, Boeing Company description of the Dreamliner.

The Lexus and the Olive Tree, order the terrific book by Thomas Friedman.