Forecasting - foresighting
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Striving for strategic autonomy with foresighting

The terms foresighting and forecasting are often confused. However, they have completely different meanings. Foresighting is a much more valuable approach of the future, because it takes into account scenarios that are not blind to tomorrow’s reality.

Nobody knows what the future holds. Still, we try our very hardest to paint a picture of it here and now. With a view to strategic autonomy, which is also an important goal at European level. Data is a valuable part of that and absolutely essential, although there are two ways in which it can be used.

Forecasting: an extrapolation of the present

In essence, forecasting is based on a simple principle. Data about the past forms the starting point. Based on several parameters, that data is then extrapolated to sketch an image of the future. Effectively, forecasting comes down to predicting future developments based on historic data.

To illustrate this point, you can look at the ratio of gross national product (GNP) of a country or continent in relation to the global picture. Today, Europe’s share is 18%, while thirty years ago it was 17%. Calculate the growth percentage and use that figure to find out what that ratio will look like in another thirty years. That is forecasting. Which does not mean that the prediction will become reality.

The problem with forecasting is that it ignores today’s reality. The financial crisis, for example, is something nobody anticipated. It does not take into account the impact of the war in Ukraine or the Covid pandemic. Thus illustrating the limitations of this method. Forecasting will, by definition, always be wrong. As evidenced by the FED forecasts, which are consistently off target when it comes to inflation and growth.

An economist is therefore often referred to as someone who is very good at predicting the past.

Foresighting: scenarios of the future

The future is far too complex for simple models, based on extrapolation. It is naive to believe that the world won’t change in the future. Or that those changes won’t have an immediate impact. That is why foresighting uses a different approach to form an image of the future, namely: taking into account different scenarios.

Those scenarios, among other things, take into account the complexity of reality. There is not just one possible future. There are many different possible routes. Based on what is most probably, a policy is outlined. That way, ultimately, that which is most probable, will hopefully also become reality. After all, that is the future people are prepared for.

To map those scenarios, we evaluate the current trends that are having a significant impact. These may range from demographical imbalances to changes in the nature of labour. But protectionism might also be an increasingly notable tendency.

Taking those trends into account, four scenarios for the future of Europe can be worked out:

  • There is a turbulent period coming where the ties with Russia and the US take a dive and Europe collapses. In that event, it is sensible to protect what we have.
  • It might be that the future is a given that we no longer worry about. Après nous, le déluge. We resign ourselves to whatever the future holds.
  • Europe focuses on its strengths (e.g., biotech) and puts all of its energy into that, while letting go of other goals.
  • We no longer seek to repair the imperfect consensus of today, but learn to live with it.

Based on the hypothesis that seems most probably, policy recommendations will be formulated to prepare us for that future.

In practice

We are highly dependent on Asia for raw materials. More concretely, during the Covid pandemic, Europe found that it was dependent on China for face masks. Strategically speaking, it is safer to be slightly less dependent, without turning fully protectionist and dissolving partnerships.

Based on economic data, it can be identified for which raw materials or products we are strongly dependent on other countries. Subsequently, we investigate which ecosystems are most vulnerable. In other words: where is the risk the greatest that our supply lines become compromised sooner or later? What areas are least stable or most vulnerable?

Research has shown that there are 137 products that are crucial for Europe. For more than half of those we are dependent on China, for 11% of them we depend on Vietnam. In concrete terms: 90% of our antibiotics come from China. It comes down to developing a policy that strives to reduce that dependency for those crucial resources or components.

Full autonomy is not the goal here, the goal is strategic autonomy. For certain resources and products, a strategy is developed to determine how much we want to produce within Europe and for how much of it we are willing to depend on other continents. Every time with strategic autonomy in mind.

Rudy Aernoudt is a professor at the University of Ghent and the University of Nancy, writer, columnist, philosopher, economist and esteemed guest speaker at national and international conferences on geopolitics, economics and policymaking. On Wikipedia you can find complete information about our guest blogger.

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