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Policy challenges for the next 50 years
The OECD presented a scenario analyzing key global challenges over the next 50 years until 2060. It found that global economic growth will slow, incomes will increase but not fully converge, and the global economy will become more interconnected and multipolar. Emerging economies will shift to higher value industries. Maintaining growth, reducing inequality, and protecting the environment were identified as the three main policy challenges. Achieving future growth will require policies supporting knowledge-based economies, more investment in education, and potentially more progressive redistribution policies. Global resource pressures will also greatly increase even with improvements in resource intensity.
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Policy challenges for the next 50 years
- 1. OECD 50-YEAR GLOBALSCENARIO Policy Challenges for the Next 50 Years Rintaro Tamaki Deputy-Secretary General and Acting Chief Economist 2 July 2014, Tokyo
- 2. The OECD willbe 100-years old in 2060 What are the policy challenges for the next 50 years? The OECD 50-Year Global Scenario helps to highlight key global challenges and how they are connected Policy Challenges for the Next 50 Years 2
- 3. Global economic growthwill slow GDP growth 3
- 4. Incomes will increase, butnot have converged GDP per capita as a share of advanced economies’ average level 4 China India Emerging economies (average) 0 5 10 15 20 25 30 35 40 45 50 2000-2010 2010-2020 2020-2030 2030-2040 2040-2050 2050-2060
- 5. 5 The global economywill become more interdependent … 0 5 10 15 20 25 30 35 2010 2060 Per cent Exports as a share of global GDP
- 6. …and multipolar astrade shifts to EMEs, and especially to Asia Size and share global trade 6 Advanced- Advanced 25% Advanced- Emerging 42% Emerging- Emerging 33% 2060 Advanced- Advanced 47% Advanced- Emerging 38% Emerging- Emerging 15% 2012
- 7. Emerging economies willmove into higher value-add activities Value-added shares by sector 7 41% 31% 41% 29% 20% 22% 15% 17% 16% 21% 16% 21% 7% 13% 8% 9% 10% 12% 6% 8% 43% 49% 51% 58% 72% 69% 75% 71% 78% 71% 2010 2060 2010 2060 2010 2060 2010 2060 2010 2060 Services High-skilled manufacturing Other sectors (agriculture, energy and other manufacturing) China India Euro Area Japan USA
- 8. 8 There will bemajor shifts in specialisation 63% 42% 68% 39% 54% 57% 23% 39% 29% 43% 21% 36% 18% 22% 37% 29% 8% 15% 11% 25% 28% 20% 40% 32% 2010 2060 2010 2060 2010 2060 2010 2060 OECD Emerging Asia Rest of world Manufacturing Services Agriculture Energy Shares of global exports by sector
- 9. Getting more peopleinto jobs will no longer be a key growth driver Ageing populations reduce scope to grow through an increasing population Innovation and productivity “catch up” will continue to drive growth Increasing education and skills of workers is key 9
- 10. 3 policy challenges Sustaininggrowth Tackling rising inequality Protecting the environment 10
- 11. 1. The GrowthChallenge Achieving future growth requires sound policies Policy needs to support more dynamic, knowledge- based high value-added economies 11 0 1 2 3 4 5 6 United-States Japan Euro zone China India Per cent 2010-2030 2030-2060
- 12. Ageing makes itharder to sustain growth 12 62 64 66 68 70 72 74 76 78 80 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 Per cent European union United States Japan China Population aged 15-74 as a share of the total
- 13. Using migration tooffset the effects of ageing will become harder 13 0 50 100 150 200 250 300 Euro area United States Baseline Scenario with less immigration Million * Scenario where migration falls due to narrowing income differentials Labour force, 2060
- 14. 2. The InequalityChallenge: rising income gaps in advanced countries Ratio of gross wages of the top 90th to the bottom 10th percentile Rising wages for high-skilled workers Incomes of low-skilled in advanced economies fall behind 14 0 1 2 3 4 5 6 7 8 Italy Sweden France Japan Germany OECD - 29 countries United Kingdom Canada United States 2010 2060
- 15. Growth will reduceincome differences between countries and reduce poverty. But, by 2060, average inequality in the OECD average would be close to current US levels. More investment in education, skills and life-long learning is needed There will be more demand for progressive/redistributive policies, to balance against sustaining growth 15
- 16. 3. The EnvironmentChallenge Million tonnes, CO2 equivalent 2010 48 700 million tonnes 2060 99 500 million tonnes GDP will increase to four times its current level The resource pressures will be huge, even if intensity falls 16
- 17. A new approachto policy challenges Policies need to prepare for a shifting world The case for structural reform is stronger and more urgent with new challenges All dimensions of well-being will be more connected 17
- 18. The “globalisation paradox” Theglobal economy will be more integrated so closer cooperation is needed The world will be multipolar so cooperation could be harder to achieve 18
- 19. OECD 50-year GlobalScenario website 19 Further reading OECD Economics Department working paper series
- 20. OECD 50-Year GlobalScenario framework 20