As we continue our three-part series on the major challenges the world and the global economy will face in 2024, we look at how the fight for natural resources and the impact of AI will reverberate
This coming year stands as a pivotal moment not only for the global trade system but also for the intensifying competition in both natural resources and advanced artificial intelligence (AI).
On one hand, the global stage will confront heightened challenges in securing and managing essential resources, a struggle deeply intertwined with geopolitical rivalries. On the other, there is an equally critical race for dominance in the field of AI, a key driver of future economic and strategic power. Both of these challenges demand effort and investment from companies with little guarantee of long-term payoff, especially as the situations shift on a seemingly weekly basis.
In the second of our three-part blog series, each covering two major challenges that the world will face in 2024, we delve into the ongoing challenges resulting from these competitions as well as some of the ways that businesses and organizations can best adapt.
Challenge #3: The fight for natural resources
It would be naïve to say that at any point in recent history nations have stopped competing for natural resources. The annals of the post-World War II era are replete with the strategic jostling for oil, minerals, and water, which has often dictated international relations and economic policies. However, this competition seems to be heating up as it heads into a new phase, especially as the international economy is starting to splinter back into power blocs.
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Part of this is simple supply and demand, of course. Countries that were once primarily based on resource extraction — such as China, India, and Brazil — have developed their own industries and are now becoming resource consumers, putting additional pressure on global resources. Combine this with a rush into the resources required by new green energy infrastructure, which includes a plethora of rare earth metals, and it becomes clear why the fight for natural resources is picking up.
Not surprisingly, one of the hotspots for this competition is a region with a scarred history of such conflicts: Africa. The nation of South Africa in particular, one of the largest producers of precious metals, is facing serious challenges from social unrest, labor disputes, power shortages, and corruption. Meanwhile, the continent’s so-called Coup Belt, stretching from West to Central Africa, is home to some of the world’s most sought-after minerals that are essential for electric vehicles, batteries, and electronics. As the name implies, political instability is a hallmark of the region, with multiple overthrows of governments within just the last couple years, often involving the intercedence of multiple foreign nations.
As the region’s former colonial power, France’s influence in the region has been in constant retreat as a wave of popular vitrail against the old imperial power has grown. At the same time, Russian influence in the region is also somewhat uncertain. After years of growing prominence in the region as a peacekeeping and economic partner, Russia’s war in Ukraine may be a major turning point as African operations began competing for equipment and bodies with the Eastern European front.
China may be another story as it is also a major actor in Africa’s natural resource landscape, with a large and diverse presence in trade, investment, aid, and diplomacy. The nation opened its first oversea military base in the African nation of Djibouti in 2017 and has military agreements in multiple African states. Add in the numerous American and western interests in the region, themselves no stranger to controversy, and the potential for conflict to erupt somewhere over Africa’s resources in 2024 seems more like a certainty.
Indeed, instability will continue to be a constant companion to the opportunity for growth that Africa holds, yet as the world splinters into political and economic blocs, conditions could align where Africa is once again carved into fiefdoms of foreign nations. This kind of separation could pull apart not just geography, but the intertwining economic connections businesses, organizations, and peoples are currently struggling to build.
And Africa is not alone as a source of tension, as South America is currently experiencing an escalating crisis over the territory of Guyana. In December, Venezuela held a five-question referendum which focused on a potential annexation of a large swath of neighboring Guyana. The disputed region is rich in oil and gas, especially valuable for a struggling Venezuela oil industry. Guyana, one of the poorer countries in the world, is seen as the territory’s rightful owner by the international community and the potential for the crisis to pull in multiple powers exists. The eruption of a war in South America will bring broader levels of instability, especially in the global oil market but could also highlight how a region that has been relatively peaceful in the 21st century can quickly spiral out of control.
In a very different corner of the world, Indonesia, the world’s fourth most populous country and a major exporter of coal, copper, and rare earth metals, is gearing up for presidential and parliamentary elections in 2024, which could have significant implications for its natural resource sector. The current president has been pursuing a national industrial agenda that aims to increase the value-added industry and domestic processing of the country’s natural resources, especially in those minerals that are vital for green energy production. Such efforts hold the potential to turn the nation from not just a source of valuable natural resources but allow it to inherit the status of a global factory nation, especially as China shifts away from its manufacturing dominance.
All this competition over global natural resources will have significant implications for actors across the spectrum. As the global supply chain becomes more complex and fragmented, the challenges of ensuring its resilience, efficiency, and transparency will also grow, requiring more coordination and cooperation among stakeholders. Acquiring resources will likely only become harder for most industries and require greater attention from leadership as this situation intensifies.
Challenge #4: Artificial Intelligence
AI, as a technology, is unlikely to see such a payoff in 2024 that alone would categorize it as a dominant factor of the year. However, the long-term potential of the technology will force countries and organizations to begin competing for control and access now, because by the time the technology’s potential is realized these footings may be out of reach.
One of the key battlegrounds will be the production and supply of AI chips, which are specialized semiconductors that enable faster and more efficient processing of large amounts of data, an essential material for AI applications. The global AI chip market is expected to grow rapidly in the coming years; however, the market is also highly concentrated and dependent on a few players, mainly those in the United States and Taiwan that have the advanced technology and manufacturing capabilities to produce these chips. China, despite its massive investment and consumption of AI, still lags behind in this area and relies heavily on imports of AI chips, especially from the US, which has imposed export restrictions on some of its AI chip makers, citing national security and human rights concerns. This has prompted China to accelerate its efforts to develop its own AI chip industry, through state support, domestic consolidation, and overseas acquisition.
Great attention will be paid to new developments that will begin to show the full potential of technology. Regulation and government intervention across the globe will also continue to be a dynamic force, shifting the courses that companies and countries take. For example, the European Union has proposed a comprehensive framework for regulating AI applications, which aims to foster trust and innovation in AI, while addressing the ethical and social challenges posed by the technology. On the other hand, the US has adopted a more hands-off approach, relying on existing laws and executive orders to oversee AI. China, meanwhile, has emerged as a global leader in AI, investing heavily in its infrastructure, talent, and innovation ecosystem, as well as applying AI to various domains such as health, education, business, and security. China’s AI ambitions, however, have also raised concerns about its governance model, data practices, and geopolitical influence, especially as it seeks to export its AI solutions and standards to other countries.
Data and expertise are two other critical resources for AI development and deployment, and they will also be subject to fierce competition and contention in 2024. Data is the fuel for AI, and the quality, quantity, and diversity of this fuel are crucial for enabling the latest generation of AI models. The type of good data needed is also a scarce and valuable asset, however, and it is often proprietary, sensitive, fragmented, and subject to different rules and standards across jurisdictions. China has already proposed a blacklist of certain types of training data for generative AI models with other countries likely to follow. Therefore, data collection and sharing will be a contentious issue in 2024, as stakeholders will have to balance the trade-offs between privacy and innovation, security and openness, and sovereignty and cooperation.
Not surprisingly, the demand for AI experts — such as researchers, engineers, and practitioners — will also continue to grow in 2024, as more sectors and domains adopt and integrate AI into their operations and services. However, the supply of AI experts will remain limited and uneven as the sudden rush of utilization outpaces the rate at which new experts can enter the profession.
Generative AI, the white-hot component of the AI tech stack, itself is unlikely to start paying off in 2024 as the world-changer it is said to be. And while the degree of investment into the technology is likely to be a defining feature of the year, Gen AI’s true potential will also be one of the largest question marks for the remainder of the decade.
For corporate leaders, these two challenges of competition over natural resources and AI, means that information and investing in proper due diligence will be keys to success. Leaders need to better understand their organizations’ supply chains, local regulations, and the goals of local and national governments. Without a doubt, getting a full view of the playing field is increasingly important, and those who fail to accurately assess the conditions will be those who fall behind in an increasingly complex world.
Our colleagues at Reuters are covering these and other crucial stories every day, and you can keep up with the best international reporting from around the world at www.reuters.com.