Growth

This overview, followed by five supporting reports, identifies these challenges of tomorrow, points to key choices ahead, and recommends not just ‘what’ needs to be reformed, but ‘how’ to undertake the reforms. The overview is divided into nine chapters. The first chapter examines the characteristics of China’s development since 1978; considers future opportunities, challenges, and risks; and describes a vision of China in the year 2030. The second chapter maps a new strategy that will realize this vision, focusing on the key choices ahead for China to sustain rapid economic and social development and become a modern, harmonious, and creative high-income society before 2030. Chapters three to eight elaborate on each of the six pillars of the new strategy: consolidating China’s market foundations; enhancing innovation; promoting green development; ensuring equality of opportunity and social protection for all; strengthening public finances; and achieving mutually beneficial win-win relations between China and the rest of the world. The ninth and final chapter addresses implementation challenges, including the sequencing of reforms and overcoming obstacles that are likely to emerge.

"In the framework of both the Lisbon Strategy and the Sustainable Development Strategy, European institutions agreed on the necessity to modernise and develop the European social model in the light of slowing growth, persistent structural unemployment, rising inequalities.
In recent years along with the persistence of the main risks of the industrial society (illness, disability, old age) new social risks are brought about by economic and demographic developments; main factors are: a higher probability of job loss for larger parts of society and different age cohorts; changes in size and composition of families with reduction of the capacity to provide “in house” care; limited capacity of welfare systems to deal with these risks due to financial constraints and difficulty in updating welfare arrangements; cultural and education gaps. These transformations pose a serious problem of adequacy of the European welfare states. The present patterns may reveal not as successful as they used to be in protecting all against poverty, in guaranteeing social cohesion and in responding to citizens’ aspirations in modern democracies.
Social challenge is common to all EU Member States, but exposure to old and new social risks largely varies across regions. In this paper, the assessment of regional sensitivity is based on a summary index of social risk which combines several indicators of drivers referring to three relevant dimensions: family, labour market, and welfare. With more detail, the following indicators have been used:
• the share of poor at regional level, as a proxy of the size of the social risk in terms of income;
• the rate of employment calculated on total population, that embodies the social impact of both demographic trends (share of population in working age) and of labour market factors (activity rate on working age population and rate of unemployment);
• the educational attainment of working people, as a proxy of the regional share of low-skilled workers with higher probability of experiencing unemployment or of receiving a low wage;
• an index of efficacy, adequacy and sustainability of the welfare states at national level
According to the level of social risks measured by the summary index, regions have been classified in five typologies which have been displayed in a map. More than one half of European regions show a low or very low sensitivity to social risks. These top class regions are concentrated in Northern (especially low risk regions) and Central Europe along with United Kingdom. On the opposite side, about one quarter of European regions have a high or very high sensitivity confirming the existence of great disparities among countries and regions. Generally speaking, the two most critical areas are individuated in the Mediterranean countries –Portugal, Southern Spain, Greece, Italian Mezzogiorno- and in the Eastern area of new Member States with the exception of Estonia. Comparison with maps of European cohesion policy is interesting. All the regions with high and very high exposure to social risk are regions of Convergence or phasing-out area, with few exceptions. In the other direction, most of the regions of Convergence area show a high and very high social risk exposure. This is especially true for Southern Italy, Spain, Portugal, Greece, Hungary, Poland, Slovakia, Latvia and Lithuania (and would be true also for Bulgaria and Romania not included in summary index). There are however important exceptions regarding some of the new Member States (Czech Republic, Slovenia and Estonia), Eastern Germany and Convergence regions in the United Kingdom showing an intermediate or low social risk sensitivity.
In neighbour countries the picture is more concerning. Fight against poverty and promotion of employment are priorities in each country. Most of them are still faced with a number of challenges such as high unemployment, which particularly affects young people and women, the prevalence of an informal economy, leaving workers without social rights and social protection, as well as the mismatch between education and labour market needs. Most countries lack an integrated approach combining economic, employment and social objectives. They also suffer from poor administrative capacity in this area. Significant efforts are needed to implement effective labour market policies, to promote decent work and guarantee productive employment, rights at work, social protection and equal opportunities for men and women.
As far as challenge intensity is concerned, the European Union is in a favourable condition with regard to social risks in a broader OECD perspective; in fact, all countries with income inequality below OECD average level are European. Nevertheless there are various factors which may increase the intensity of the challenge on Europe.
The number of Europeans living under the poverty line has increased in the last decades. Around 100 million Europeans in 2004 (22.5% of the total population) had less than 60% of the EU median income, but the situation is widely differentiated across countries and within them.
Although social benefits reduce the percentage of people at risk of poverty, serious holes exist in the social protection policies in several countries. In addition there are doubts on the financial sustainability of the present model in the next decades and on its adequacy to deal with new social risks.
The employment and participation rates remain below the targets set within the Lisbon Strategy, especially for women and old workers. Data on educational attainment show that the share of population with secondary and tertiary education is lower than other large OECD countries.
Impacts of social challenge on disparities depend on the relation between regional sensitivity and challenge intensity and they are assessed in a qualitative manner through construction of two scenarios corresponding to the two extremes of the expected range of variation of challenge intensity. A pessimistic scenario is characterised by a decrease in the number of double wage households and an increase in the number of people living in working-poor families or depending on social transfers. In a context of slow growth and of tightening financial constraints, new demand for welfare do not find adequate coverage. The target set by Lisbon Strategy in terms education and of employment rates are only partially achieved. This pessimistic scenario is likely to lead to increasing regional inequalities.
In an optimistic scenario, greater labour demand driven by economic expansion, and more effective policies allow an increase in participation rates and in the number of double wage earner households. In addition investments in education and life long learning increase average skill levels of both local and immigrant workers, reducing the proportion of low skilled low-income workers. Effective reforms of the welfare states, made easier by loosening financial constraints, ensure greater coverage for old and new social risks. This optimistic scenario is likely to be linked to a process of convergence."

"This paper provides a concise analysis of the potential impacts of key challenges such as globalisation, demographic change, climate change, energy and new social risks on regional disparities in Europe in the period up to 2020. The challenges reviewed here are relevant for other parts of the world as well as Europe and will require responses at many levels - global, European, national, regional and local.

This paper is particularly concerned with regional impacts and more especially the potential effect of new challenges on convergence or divergence of trends in regional income and well-being within the European Community and neighbouring areas. The present paper is based upon 5 thematic workshops held between March and June 2009 in Brussels and the background papers prepared by experts in preparation of the workshops. The paper is also based upon a new analysis produced by the Regional Future network itself, as well as prior research by international institutions and scholars. The study team has carried out the analysis using a definition of the challenges considered more suitable for the aim of the study on regional disparities; definitions which would allow to identify and measure effect on disparities more directly were adopted. Furthermore, we avoided as far as possible the overlapping between definitions of challenges and their manifestation, which we call features of the challenge. This approach implies that each feature has been analyzed only within one challenge, even if it was relevant for others as well. The purpose was to clarify and simplify the conceptual framework of the analysis in which the number of links among challenges is very high and their direction and sign is difficult to define. In other words, we made sure that each individual feature of the challenges was analyzed once, in coherence with the challenge boundaries set by its definition.

This method allows us to make clear hypothesis on the two sided nature of each phenomenon and of its features; many features of the challenges in fact can benefit as well as penalize regions depending on the economic and social structure, the geography and location and also the geo-economic position of each region. Most of these factors are strongly influenced by the National characteristics of the Member State to which they belong. To carry out the analysis we defined a model based on a definition of sensitivity to the challenge which summarizes the vulnerability of each region under that challenge and gives us a parameter to estimate the likely impact of the challenge on its economic performance. The sensitivity parameters of each region were then related to a set of hypothesis of challenge intensity (scenarios), namely how fast and how strong the challenge impact would affect EU regions and give rise to income disparities."

"This paper is built around ‘trends, tensions and transitions’ in the Euro-Mediterranean space. In ‘trends’ we examine the way in which critical issues in the region are evolving and how they might develop over the next twenty years. ‘Tensions’ considers how these trends will interact to generate stresses at different socio-political levels. ‘Transitions’ explores some options for intervention to correct malign tensions and benefit from benign ones; the particular choice of the ‘transitions’ is based on the four themes of cooperation described above: managing conflict; win-win projects; deeper economic integration and eventually moving towards a Euro-Mediterranean Community".

CEPII presents growth scenarios for 128 countries to 2050, based on a three-factor production function that includes capital, labour and energy. CEPII improves on the literature by accounting for the energy constraint through dynamic modelling of energy productivity, and departing from the assumptions of either a closed economy or full capital mobility by applying a Feldstein-Horioka-type relationship between savings and investment rates.
Results suggest that, accounting for relative price variations, China could account for 28% of the world economy in 2050, which would be much more than the United States (14%), India (12%), the European Union (11%) and Japan (3%). They suggest also that China would overtake the United States around 2025 (2035 at constant relative prices). However, in terms of standards of living, measured through GDP per capita in purchasing power parity, only China would be close to achieving convergence to the US level, and only at the end of the simulation period.

China and India, the world's two most populous countries, will exercise increasing influence in international affairs in the coming decades, and each country's role on the world stage will be affected by the progress that it makes and by the competition and cooperation that develop between them. This monograph focuses on the progress China and India seem likely to achieve from 2010 through 2025 in four domains: demography, macroeconomics, science and technology, and defense spending and procurement. In each domain, the authors seek answers to these questions: Who is ahead? By how much? and Why? The authors find that India has distinct advantages over China in terms of demographics; that the two countries are surprisingly close in terms of forecasted economic growth, although China's overall economic output is likely to remain significantly higher than India's; and that, for both science and technology and defense spending and procurement, China's current substantial margins over India are likely to rise but by amounts that will vary widely depending on several alternative scenarios. The monograph concludes with implications for policy and for further research.

Are presented growth scenarios for 147 countries to 2050, based on MaGE (Macroeconometrics of the Global Economy), a three-factor production function that includes capital, labour and energy. We improve on the literature by accounting for the energy constraint through dynamic modelling of energy productivity, and departing from the assumptions of either a closed economy or full capital mobility by applying a Feldstein-Horioka-type relationship between savings and investment rates. Results suggest that, accounting for relative price variations, China could account for 33% of the world economy in 2050, which would be much more than the United States (9%), India (8%), the European Union (12%) and Japan (5%). They suggest also that China would overtake the United States around 2020 (2040 at constant relative prices). However, in terms of standards of living, measured through GDP per capita in purchasing power parity, China would still lag 10 percent behind the United States at the 2050 horizon.

Thinking of how the relative sizes of countries and how the geography of world production and trade will be affected in the long run must be based on sound economic reasoning about the determinants of long term growth. It must also be embedded in a general equilibrium framework that takes account of the interactions among markets and sectors, as well as between countries. This paper takes stock of a three phase research project. The first step consists of deriving and estimating a three-factor (labour, capital, energy) macroeconomic growth model for a large set of individual countries, which fits two forms of technological progress (standard TFP and energy efficiency). The second step consists of recovering the sectoral detail with an energy-oriented Computable General Equilibrium model of the world economy calibrated to fit these projections. In a third step we confront the assumptions for our baseline to alternative scenarios.

Asia’s rise is changing the world. This is a defining feature of the 21st century—the Asian century. These developments have profound implications for people everywhere.

Asia’s extraordinary ascent has already changed the Australian economy, society and strategic environment. The scale and pace of the change still to come mean Australia is entering a truly transformative period in our history.

Within only a few years, Asia will not only be the world’s largest producer of goods and services, it will also be the world’s largest consumer of them. It is already the most populous region in the world. In the future, it will also be home to the majority of the world’s middle class.

The Asian century is an Australian opportunity. As the global centre of gravity shifts to our region, the tyranny of distance is being replaced by the prospects of proximity. Australia is located in the right place at the right time—in the Asian region in the Asian century.

For several decades, Australian businesses, exporters and the community have grown their footprint across the region. Today, for Australia, the minerals and energy boom is the most visible, but not the only, aspect of Asia’s rise. As the century unfolds, the growth in our region will impact on almost all of our economy and society.

An increasingly wealthy and mobile middle class is emerging in the region, creating new opportunities. They are demanding a diverse range of goods and services, from health and aged care to education to household goods, and tourism, banking and financial services, as well as high‑quality food products.

Beyond economic gains, there are many valuable opportunities for building stronger relationships across the region, including through closer educational, cultural and people‑to‑people links.

Our nation also has the strength that comes from a long history of engagement with countries in Asia. Australia’s relationships in our region are strong and robust, including with Asian nations like China, Japan, India, Indonesia and the Republic of Korea (South Korea). But in this Asian century we must enter a new phase of deeper and broader engagement.

This White Paper provides a roadmap for the whole of Australia—governments, business, unions, and the broader community—in this next phase. Our goal is to secure Australia as a more prosperous and resilient nation that is fully part of our region and open to the world.

Australia starts from a position of strength. Just as our region has a lot to offer us, we have a lot to offer our region. We have strong, world-leading institutions, a multicultural and highly skilled workforce, and a productive, open and resilient economy, which is one of the strongest in the world. These assets have been reinforced by a series of economic reforms and good decisions made over past decades, including Australia’s world-beating actions to avoid the worst impacts of the Global Financial Crisis.

Our strengths have long been reflected in Australia’s interaction with countries in Asia. Over the past 50 years, Australia’s trade with Asia as a share of our total trade has risen dramatically. Our financial, political and cultural links have deepened. We have strong relationships and close friendships with countries across the region.

But Australia’s success will be based on choice, not chance. In order to succeed, we must sustain the policy settings and pathways that have served us well. We need to reinforce our strong social foundations, including our national institutions, our cultural diversity and our outward-looking society.

We will need to do more than this—we all need to respond to the rapid changes occurring in our region.

Australians need to act in five key areas in order to succeed in the Asian century.

First, irrespective of how the Asian century evolves, Australia’s prosperity will come from building on our strengths. We need to reinforce the foundations of our fair society and our prosperous, open and resilient economy at home. We need to build on areas where we already perform well, in order to extend our comparative advantage. Critical to this will be ongoing reform and investment across the five pillars of productivity—skills and education, innovation, infrastructure, tax reform and regulatory reform.

Second, as a nation we must do even more to develop the capabilities that will help Australia succeed. Our greatest responsibility is to invest in our people through skills and education to drive Australia’s productivity performance and ensure that all Australians can participate and contribute. Capabilities that are particularly important for the Asian century include job‑specific skills, scientific and technical excellence, adaptability and resilience. Using creativity and design-based thinking to solve complex problems is a distinctive Australian strength that can help to meet the emerging challenges of this century. As a nation we also need to broaden and deepen our understanding of Asian cultures and languages, to become more Asia literate. These capabilities are needed to build stronger connections and partnerships across the region.

Third, Australia’s commercial success in the region requires that highly innovative, competitive Australian firms and institutions develop collaborative relationships with others in the region. Australian firms need new business models and new mindsets to operate and connect with Asian markets. We will work to make the region more open and integrated, encouraging trade, investment and partnerships. Firms will adapt their business models to seize the opportunities created in our region.

Fourth, Australia’s future is irrevocably tied to the stability and sustainable security of our diverse region. Australia has much to offer through cooperation with other nations to support sustainable security in the region. We will work to build trust and cooperation, bilaterally and through existing regional mechanisms. We will continue to support a greater role for Asian countries in a rules‑based regional and global order. Australia’s alliance with the United States and a strong US presence in Asia will support regional stability, as will China’s full participation in regional developments.

Fifth, we need to strengthen Australia’s deep and broad relationships across the region at every level. These links are social and cultural as much as they are political and economic. Improving people-to-people links can unlock large economic and social gains. While the Australian Government plays a leading role in strengthening and building relationships with partners in the region—with more intensive diplomacy across Asia—others across a broad spectrum spanning business, unions, community groups and educational and cultural institutions also play an important role. Stronger relationships will lead to more Australians having a deeper understanding of what is happening in Asia and being able to access the benefits of growth in our region. In turn, more of our neighbours in the region will know us better than they do today.

Success in the Asian century requires a whole-of-Australia effort, with businesses, unions, communities and governments being partners in a transformation as profound as any that have defined Australia throughout our history.

It is in the interests of all Australians—and therefore in the national interest—to develop the capabilities and connections that Australia will need, so that we can contribute to, and learn from, the region, and take full advantage of these opportunities.

The challenges ahead require sustained effort; Australians cannot build stronger relationships or learn new skills overnight, or even over five years, especially given the diversity of the countries in our region. Some actions can be taken immediately, but others require further conversation among communities across the nation, detailed planning and careful implementation over a generation.

Chapters 1 to 4 of the White Paper explain the extraordinary rise of Asia over recent decades and its likely future to 2025. They examine Australia’s place in Asia and our outlook to 2025. This sets the scene for a roadmap for Australia in the Asian century.

Chapters 5 to 9 set out an ambitious set of national objectives and pathways to guide Australia to 2025. Advancing and implementing these national objectives sets the agenda for taking full advantage of the Asian century, but achieving these objectives will require a concerted and coordinated effort from the entire community.

This briefing paper has been designed as an introduction to the governmental seminar held on August 19th, 2013. It was prepared during July-August 2013 by a group of experts from the CGSP. It includes comments and ideas for discussion concerning a ten-year horizon and sketches out an approach for developing a medium-term strategy, without in any way claiming to raise all the questions or provide suitable answers. Its principal aim is to initiate discussion on the agenda.

Thinking and debating about what the French people wish to be ten years from now, fixing the roadmap ahead on the basis of such discussion, and implementing the actions to be taken will enable the country to come out from its current confusion. France in 2013 is not the France of the 1970s, nor even that of the 1990s. The priorities and urgencies of today are not the same as they were. The State is no longer able to decide for society as a whole. Continuity and consistency are essential to address the issues to be tackled, and adopting a rigorous method will be extremely worthwhile. In this context, the current briefing paper is divided into three sections. The first provides a brief snapshot of the world, of Europe, and of France in the next ten years. The second dwells on three key collective choices that are particularly important for French society. The third suggests methodological elements and some reference points as an aid to producing a ten-year strategy.