Global GDP could be 13 times larger, and living standards nine times higher in the next 100 years in the ‘high ambition scenario’ envisaged by the International Monetary Fund.

 

However, in the ‘low ambition scenario’, global GDP would be about three times larger and living standards twice as high as today, said Kristalina Georgieva, IMF Managing Director, in a speech titled "“The Economic Possibilities For My Grandchildren” at King’s College, Cambridge on Thursday.

 

She said there is a promise to be made to the next generation and highlighted three priority areas of investment: the new climate economy, the next industrial revolution, and people.

 

The past 100 years have seen more progress for more people than ever before in human history, but “there have been policy errors -- especially a failure to do enough to support those hit hard by

dislocations from new technologies and trade,” she said.

 

Major challenges, but also great opportunities

“We have also learned that high levels of economic inequality have a corrosive effect on social capital and trust -- in public institutions, in companies, in each other. We see trust diminishing among nations too, with geopolitical tensions on the rise. If that trend were to continue, the world economy could ‘fragment’ into rival blocs,” warned Georgieva.

 

At the same time, there are great opportunities: the green transition; artificial intelligence; quantum

computing; nanotechnology; and nuclear fusion, to name just a few.

 

“If the past 100 years are any guide, we can be reasonably confident in our ability to achieve astounding progress once again. Add to this a clear understanding of what did not work in the past, and we have ‘agency’: the power to change course.”

 

Invest in fairer global economy

To get to the high ambition scenario, we need a different kind of growth: more sustainable and

equitable, more resilient so that countries can better navigate what is likely to be a more shock-prone world. 

 

“Above all, we have an obligation to correct what has been most seriously wrong over the last

100 years -- the persistence of high economic inequality," she said.

 

“Prospects for my grandchildren will hinge on whether we can allocate capital to where it is needed

most and will make the biggest positive impact, and on our ability to cooperate, to achieve progress and to share the benefits of it.”

 

‘21st-century multilateralism’ based on key principles

It would be more representative, with a better balance between advanced economies and the voices of the emerging and developing countries; it would be more open and ‘listening’ -- not only to official but also non-official voices, those of communities and social organizations based on common interest; it would be more results-oriented, with more concrete deliverables.

 

Updating the multilateral framework means updating its institutions, including the IMF, as a

“transmission line” to the world for sound economic policies, financial resources, knowledge—and as the ultimate platform for global economic cooperation, she said.

 

"We cannot have a better world without cooperation. On this most fundamental of points, Keynes was right," she said referring to n John Maynard Keynes’s 1930 essay, 'Economic Possibilities

for our Grandchildren'. -TradeArabia News Service