The world is changing: here's how governments must adapt to survive

The technological revolution has coincided with surging inequality, populism and debt. With trust in government dwindling, how can public institutions keep up? Michel El Khoury, the Director of the Office of Strategic Affairs at Abu Dhabi's Crown Prince Court, explains.

Recent years have brought incredible change. Technology is fundamentally transforming societies, economies, and ways of doing business. By 2020, there will be 50 billion networked devices and two billion more internet users in an increasingly connected world.

Globalisation has helped raise millions out of poverty but is moving faster than societies and institutions can adapt to. Inequality within countries is growing, giving rise to societal polarisation, and ultimately populism and nationalism.

The global economy, too, is in a precarious position. Fiscal risks remain elevated. Debt has reached historic levels, with the world's public and private debt plus unfunded pensions surpassing $300 trillion.

On top of all of that, the legitimacy of institutions is under examination. In a world where lies can be facts, manipulation can be cleverness, and selfishness looks like liberty, trust in government is dwindling. According to the 2017 Edelman Trust Barometer, only 41% of people trust government as a global institution.

To adapt to this new world, governance systems around the world must do five things:

1. Keep sight of the long-term in a world driven by short-termism and populism.

2. Drive inclusive growth centred on the well-being of citizens.

3. Harness the power of digital technologies while ensuring their benefits are widely shared.

4. Devolve power and accommodate local needs while maintaining competent central institutions that can ensure resilience and coordinated responses to crises.

5. Do more for less - and do it better - in a context of limited resources and higher expectations.

Each of these brings its own tension to governance: between the long-term and the short-term; between growth and sustainability; between technology and jobs, privacy and security; between the local and the global; and between limited resources and heightened expectations.

Such tensions require balanced solutions. To find them, there are three new paradigms by which the government of the future should run:

Visionary thinking and strategic activism

Government must look beyond short-term issues and play an active role in inventing and shaping markets. This means moving beyond simply fixing market failures to actively investing across the innovation value chain to promote growth. The free market cannot supply the roads, bridges, airports, nor support the emerging technologies that are needed to unleash smart, environmentally sustainable development and curb climate change. Government should step in.

These investments should be based on an articulated vision that provides a framework for long-term policymaking. Setting out a vision signals intent and a sense of purpose, thereby focusing minds on the government’s objectives, defining the problems that need to be solved and pushing markets in a direction they wouldn’t otherwise go.

Inclusive capitalism

To regain the trust of their citizens, governments must embrace a people-centred, socially inclusive model of growth. In part, this means addressing the gaps in social protection throughout life. That includes early childhood and higher education, but also lifelong learning, labour retooling, and, later, proper care for the elderly.

Trade and technology remain essential, but the communities most harmed by them need protection. Reform of taxation, immigration and welfare systems will help ensure a fairer distribution of wealth throughout society.

But as AI develops, government will need to complement its focus on STEM education with an emphasis on design thinking and creativity to equip students to thrive in a model of crowd-based capitalism where most of the workforce shifts from full-time jobs to become micro-entrepreneurs or on-demand workers.

Disruptive delivery

Governments must disrupt themselves to become more agile, transparent and horizontal. In part, this will involve diversifying the providers of services through new delivery models where citizens are both producers and consumers of services, and where government departments help accelerate startups aiming to solve society’s problems.

But governance will not be limited to government. A wide range of partners can be involved in innovative financing models to drive impact investment that would otherwise not happen.

Decentralisation will also be key. On matters where central government might be gridlocked, empowered cities can get on and do what’s right for them. Decentralisation, when deployed with transparency mechanisms and smart technologies like blockchain, shortens the route of accountability and could help curb corruption.

And in the context of less privileged countries, governments must collaborate and address pockets of extreme indebtedness and engage in the difficult processes of debt forgiveness rather than holding unsustainable debt under the label of austerity.

All of this will only be possible if governments can attract and build a generation of entrepreneurial public servants who possess skills in emerging fields. The same is true of government leaders, who need to break through dysfunctional structures, breach silos and communicate effectively with all stakeholders to repair regional and global governance.

(Photo credit: Flickr/United Nations Photo)