To celebrate it's 50th year, the OECD – Organization for Economic Cooperation and Development – did a remarkable exercise in perspective: identify the breadth of challenges in the key areas of economic and social conditions in 2060. Jean-Luc Schneider, economist at the OECD, shared the conclusions of the organization at the last Global Lodging Forum.
Macro-economic growth is the result of the workforce and productivity. And yet it risks changing. Growth relies on innovation and education. The aging population results in the contraction of the working population. This will be compensated for by new policies on the job market. Moreover, emerging countries are losing their the potential to catch up.
A slump in growth is expected worldwide. Prior to the crisis, it was around 3 to 4% per annum. In 50 years, it will be +2%. Emerging countries will progress more than the others but their growth will slow down. Take the example of South Korea, which grew from a developing country to a highly developed country in fifty years.
Per capita income will grow everywhere. America's wealth will double. The Chinese will be living like Americans and India's population like Southern Europeans. While the differences between countries will shrink, inequalities within each country will grow. Unsatisfied demand for unskilled personnel will automatically make salaries of skilled personnel increase.
Globalization is also expected to continue. International commerce will increase by 60% over the next 50 years.
Three goals for economic policies
- Support growth: which involves offsetting the effects of the aging active population (lengthening of working lifetime, participation of women), encourage innovation and qualifications (ex: continuing education)
- Limit the growth in inequalities. It is necessary to have an education policy (increase in the availability of qualifications, equality of chances), redistribution policy (targeted and efficient transfers, progressive taxes that don't stifle growth, cooperate on the taxation of the more mobile bases)
- Protect the environment: the OECD forecasts temperatures will be 4 to 5 degrees higher on average in fifty years. A policy must be decided upon urgently.
It is necessary to adapt economic policies
In light of the world's changing demands, politicians must act quickly. Structural reforms are urgent. Globalization is causing similar economies to become increasingly interdependent. Whence the interest of cooperating and making decisions internationally, particularly as far as concerns innovations. The danger is that in this increasingly polar world, cooperation has become increasingly difficult.
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