This year is bound to be an exciting and tumultuous one, as the first tangible effects of the long-awaited economic recovery (in growth terms) coincide with the electoral cycle. Voters can expect the nature of the election promises on both sides of the line to change substantially, with politicians emboldened by the overall uptick in economic activity.

Indeed, National’s white-knuckle grip on the purse strings eased after nearly six years with the announcement of a $360 million policy to improve teacher quality. Across the floor, Labour has proposed a $1.16 billion expansion of the welfare system (including the abolition of parental tax credits) to ease the burden of raising a child.

Weighing up the merits of these policies is by nature an as-and-when activity, but it is worthwhile to look at the global backdrop against which they are set. That is because many of the commitments – for good or for ill – will be worn by taxpayers for years to come.

It is safe to say any proposed policy that ignores the macroeconomic landscape poses a much greater long-term risk to prosperity than those specifically designed to cope with shifts in the global economy.

So what are the macroeconomic shifts we need to be aware of?

The most obvious is the demise of the Western world (including Japan) as we know it. Advances in technology and globalisation have conspired to rid them of the competitive advantages that made them rich.

Arguably, the New Zealand outlook is better, with a younger population, lower public debt and proximity to Asia, but we face many of the same challenges.

That may seem counter to what we have come to take for granted. After all, technological improvements which ushered in automation in the manufacturing sector may have made many assembly line jobs obsolete in the 20th century; it also brought major productivity gains. This translated into real wage increases of 2 per cent annually in the developed world for close to 50 years, while the number of jobs increased by 2 per cent a year over the same period.

Yet, as The Economist noted recently, many now fear that increasingly smart computers will eat into white-collar employment.

The reason technology is appealing is because it is prohibitively expensive to hire workers in the Western World. Jon Moynihan, the former chairman of PA Consulting, estimates that the average wage across the developed world is about US$150 to US$200 a day (in New Zealand the equivalent is US$136). (His presentation is worth watching.)

Researchers Carl Frey and Michael Osborne estimate that up to half of the jobs in the US labour market could be automated in the future. Some they see being replaced include telemarketers, machinists, mathematical technicians, insurance underwriters, watch repairers, cargo and freight agents, account clerks, librarians, and data entry staff to name but a few.

History shows us economies have coped with technological change in the past, with those workers displaced by machines up-skilling to find jobs elsewhere at higher pay – although the process is far from painless.

However, the new wave of technology has collided with globalisation, leaving Western economies less competitive.

Mr Moynihan puts the average pay packet in the developing world at US$2-5 a day, and he sees no reason why the gulf between these and Western salaries shouldn’t reach an equilibrium of between US$50-80 at some point in the future.

That is already happening. In the US, the number of jobs available declined by 1 per cent between 2000 and 2010, and real wages slid from a 2 per cent growth rate in the mid-1990s to the point where, in 2012, the average pay packet was 1 per cent smaller than in the previous decade.

What is more, countries such as China, India and Brazil, continue to invest in economic growth producing sectors of their economy, like education and infrastructure, while Western economies have instead enlarged the welfare state and paid for it with debt.

Japan’s total debt, including private and public, was 500 per cent to GDP mark in 2011 and many OECD countries are wrestling with debt burdens triple the size of their economies.

So what does this mean for New Zealand and the 2014 election?

First, voters need to examine each political promise against the rising tide of globalisation and technology and ask whether it helps us float or mires us helplessly in the mud along with the likes of Greece and Ireland.

One proven way to sidestep the Western death spiral is through education. Mr Moynihan’s analysis shows while a high school dropout in a Western country earns less than their 1963 counterpart in real terms, someone with a graduate degree now earns 80 per cent more than 50 years ago.

That is why it is encouraging to see education come under the spotlight so early on in the election cycle, and in such a meaningful way too. But we should stop short of congratulating ourselves too quickly. OECD benchmarks show almost a quarter of Kiwi 15 year olds in 2012 did not have the necessary mathematics skills needed to participate in the workplace or to qualify for tertiary programmes.

As a country, we should recognise that we are perched precariously between the West and the new world order. We are responsible for ensuring the policies put forward by political leaders contribute to future prosperity, instead of the developed world’s demise.

The decision is in our hands.