Jeremy Oppenheim, McKinsey Global Institute
The next twenty years will see a 35% increase in resource demand, driven by 3 billion new middle-class consumers. This will require a resource revolution that: aggressively maximises currently available productivity opportunities; enhances access to resource supply; and accelerates the next frontier of resource innovation. It is suggested that there are seven priority areas for action in order to realise this resource revolution. Four relate to ‘classic’ market failures, including: a lack of property rights; pricing of externalities; capital market failures; and dealing with the ‘public good’ nature of innovation. The other three go beyond standard market failures, and include: the need for new, integrated institutional approaches to resource governance; building awareness of resource-related risks; and shaping mindsets and consumer behaviour. These issues are discussed within the context of growing global wealth and trends in commodities, including historic prices and price volatility for a number of key resources, including energy, food, metals and agricultural materials.