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Growth

The Future of Cohesion Policy: Report II

Date of Editorial Board meeting: 
Publication date: 
Friday, December 4, 2015
Abstract in English: 
The present Report offers ideas on how to shape the forthcoming period of Community support beyond the year 2020. The analysis builds on the report “The future of Cohesion policy – Report I” which reflected on the challenges and developments at the local and regional level, focusing mainly on the efficiency and effectiveness of implementing Cohesion Policy (CP). The present Report looks at concepts and models of CP (mainly its territorial dimension) and points out the main current challenges that are most likely to shape the future economic, social and territorial structures.

This second Report in the study series offers ideas on the future of CP. It is structured around two main parts, the first on models of growth, cohesion and well-being, and the second on new ideas and choices for EU CP. Thus projections and assumptions – in particular in the third section of the Report – are of a long-term nature. The present Report largely builds on an extensive desk research including a comparative literature review as well as relevant analyses and reports carried out by the authors of this paper. In addition, the analysis is fed by the results of an online survey carried out with stakeholders who took part in the seminars on the future of CP. Finally, independent interviews were carried out with relevant stakeholders with deep insight and considerable experience in the field of CP.
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Diversifying African Trade: The Road to Progress

Date of Editorial Board meeting: 
Publication date: 
Wednesday, December 16, 2015
Abstract in English: 
Although African trade flows are accelerating at a healthy rate, most African governments have struggled to diversify their economies and to achieve inclusive, sustainable growth. “As Africans, we should be proud of our recent economic growth performance,” noted African Union (AU) Commissioner for Trade and Industry Fatima Haram Acyl in 2014, “but there should be no room for complacency.”
Increased trade could transform the African continent, which is home to thirty-three of the world’s least developed countries (LDCs) and accounted for only 3 percent of global trade in 2014. African nations that have implemented reforms supporting the free movement of goods, capital, and people have reaped a substantial development dividend and are ranked among the fastest growing economies in the world.
This report examines the current state of trade in Africa, identifies obstacles hindering economic diversification and growth, and offers policy recommendations based on these findings. It addresses the economic and geopolitical implications of the global collapse of commodity demand and China’s recent slowdown, as well as how regional trade agreements and regional economic communities (RECs) offer better opportunities for African economies to unlock growth.
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Transforming our world: the 2030 Agenda for Sustainable Development

Date of Editorial Board meeting: 
Publication date: 
Saturday, August 1, 2015
Abstract in English: 
This Agenda is a plan of action for people, planet and prosperity. It also seeks to strengthen universal peace in larger freedom. We recognise that eradicating poverty in all its forms and dimensions, including extreme poverty, is the greatest global challenge and an indispensable requirement for sustainable development. All countries and all stakeholders, acting in collaborative partnership, will implement this plan. We are resolved to free the human race from the tyranny of poverty and want and to heal and secure our planet. We are determined to take the bold and transformative steps which are urgently needed to shift the world onto a sustainable and resilient path. As we embark on this collective journey, we pledge that no one will be left behind. The 17 Sustainable Development Goals and 169 targets which we are announcing today demonstrate the scale and ambition of this new universal Agenda. They seek to build on the Millennium Development Goals and complete what these did not achieve. They seek to realize the human rights of all and to achieve gender equality and the empowerment of all women and girls. They are integrated and indivisible and balance the three dimensions of sustainable development: the economic, social and environmental.
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The murky future of global water quality: New global study projects rapid deterioration in water quality

Date of Editorial Board meeting: 
Publication date: 
Wednesday, April 15, 2015
Abstract in English: 
While California’s four-year drought is forcing the most severe mandatory water restrictions in the state’s history, another water crisis is brewing that will affect far more people and a much greater territory – the planet at large.

According to a global study by the International Food Policy Research Institute and Veolia, the world is on a path toward rapidly deteriorating water quality in many countries. The first-of-its-kind study indicates that up to 1 in 3 people will be exposed to a high risk of water pollution in 2050 from increased amounts of nitrogen and phosphorous. Up to 1 in 5 people will be exposed to a high risk of water pollution reflected by increased levels of biochemical oxygen demand (BOD).

Even using the most optimistic socio-economic models, water quality is projected to rapidly deteriorate over the next several decades which, in turn, will increase risks to human health, economic development and thousands of aquatic ecosystems in developed and developing economies alike.
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12
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Moving Saudi Arabia’s economy beyond oil

Date of Editorial Board meeting: 
Publication date: 
Tuesday, December 15, 2015
Abstract in English: 
After a surge in prosperity over the past decade fueled by rising oil prices, Saudi Arabia’s economy is at an inflection point. We see a real opportunity for the country to inject new dynamism into its economy through a productivity- and investment-led transformation that could help ensure future growth, employment, and prosperity. In a new McKinsey Global Institute report, Saudi Arabia beyond oil: The investment and productivity transformation, we discuss how the country has significant opportunities to transform its economy to become more sustainable and less dependent on oil. Among our findings:

- The oil price boom from 2003 to 2013 fueled rising prosperity in Saudi Arabia, which became the world’s 19th-largest economy. GDP doubled, household income rose by 75 percent, and 1.7 million jobs were created, including jobs for a growing number of Saudi women. The government invested heavily in education, health, and infrastructure and built up reserves amounting to almost 100 percent of GDP in 2014.
- The country can no longer rely on oil revenue and public spending for growth, in the face of a changing global energy market and a demographic transition that will significantly increase the number of working-age Saudis by 2030. The current labor participation rate is 41 percent, and productivity growth of 0.8 percent annually from 2003 to 2013 trailed many emerging economies.
- Our model integrating Saudi Arabia’s economic, labor-market, and fiscal perspectives shows that even if the country responds to these challenging conditions with policy changes such as a budget freeze or immigration curbs, unemployment will rise rapidly, household income will fall, and the fiscal position of the national government will deteriorate sharply.
- However, a productivity-led economic transformation could enable Saudi Arabia to double its GDP again and create as many as six million new jobs by 2030 (exhibit). We estimate this would require about $4 trillion in investment. Eight sectors—mining and metals, petrochemicals, manufacturing, retail and wholesale trade, tourism and hospitality, healthcare, finance, and construction—have the potential to generate more than 60 percent of this growth opportunity.
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156
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Can long-term global growth be saved?

Date of Editorial Board meeting: 
Publication date: 
Thursday, January 1, 2015
Abstract in English: 
The past 50 years was a period of exceptionally rapid economic expansion. Average per capita income almost tripled, and the global economy expanded sixfold in GDP terms. But the long-term growth outlook is extremely uncertain. Some observers raise the issue of challenging demographics; they talk about “secular stagnation” and express doubts about whether future growth can match its rapid upward trajectory of recent decades. Others point to the transformative impact of technology and paint a more optimistic picture. The debate about growth goes even deeper and broader than this. Many question whether—and how—growth can be sustainable and inclusive. There is a lively discussion about whether GDP is the right measure of growth. Amid such debate, it is difficult for policy makers and businesses to respond effectively.

In this report, the McKinsey Global Institute (MGI), which has studied growth in 30 industries in more than 20 countries over the past 25 years, reviews patterns of global growth over the past half century, focusing on the two key drivers of that growth—labor and productivity. Our broad finding is that, in the face of declining population growth that is putting pressure on the pool of available labor, the rate of GDP growth is set to be 40 percent lower than its rate over the past 50 years. To compensate fully for weakening labor growth would require productivity growth to accelerate by 80 percent from its historical rate. Drawing on five detailed sector case studies, we find that it is possible—but extremely challenging—to boost productivity growth by this margin. However, aggressive action would be needed to enhance competitiveness, harness technology, mobilize labor and further open up and integrate the world economy. Collectively, we need to engage in a frank conversation about the tough trade-offs that such action would entail.
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148
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Long-term macroeconomic forecasts Key trends to 2050

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Publication date: 
Thursday, June 25, 2015
Abstract in English: 
With many companies making strategic business decisions over long time frames, the long-term projections of The Economist Intelligence Unit (EIU) provide information to facilitate such decisions. Long-term forecasts and scenarios are also key to understanding some of the big economic issues that will shape global business in the coming decades. The EIU has an established methodology for producing long-term economic forecasts for 82 economies. We have recently completed an extension of our forecast horizon to 2050, and below we consider some of the key trends that are highlighted by these extended forecasts.
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15
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Working With a Rising India: A Joint Venture for the New Century

Date of Editorial Board meeting: 
Publication date: 
Tuesday, December 1, 2015
Abstract in English: 
Call it an American consensus: India now matters to U.S. interests in virtually every dimension. India’s economy is a fast-growing emerging market, increasingly important for international business, and Indian businesses have become investors in the United States. Geopolitically, India’s growing military capabilities can help protect the sea lanes and deliver humanitarian assistance quickly throughout the South Asian region, and increasingly across the greater Indo-Pacific. India’s long-standing stability anchors the volatile Indian Ocean region and helps ensure that no single power dominates the Asia Pacific, leading to a stable balance of power. India’s sheer scale means that complex global challenges, such as climate change, cybersecurity, and health, cannot be solved without it. Additionally, India’s diverse, plural democracy stands out in a world in which authoritarianism poses new threats to the interests of the United States and its allies.
Today, India has a window of opportunity for significant change. There are two Indias, one that appears poised for global success, and one that continues to struggle with weighty economic, social, and developmental challenges. Both exist at the same time—but against the backdrop of slowing global growth, India has a greater chance to stand out. With Prime Minister Narendra Modi elected to office on a campaign focused on job creation and economic growth rather than the welfarism of the past, India may at last be able to translate its long-heralded power potential into reality.
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95
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Technology, globalisation and the future of work in Europe: Essays on employment in a digitised economy

Date of Editorial Board meeting: 
Publication date: 
Tuesday, March 10, 2015
Abstract in English: 
The industrial structure of European economies and the types of occupation that they support are changing. This change takes many forms in different national contexts, but there are some common themes. There has been an increase in service-sector employment, both in low-skilled customer service work and in high-skilled ‘knowledge’ occupations, and a corresponding drop in manufacturing employment. This has contributed to a ‘polarisation’ of the workforce in many countries, with more high-skill and low-skill jobs but fewer requiring mid-level skills. At the same time, young people are finding it increasingly hard to get a foothold in the labour market, and the proportion of the workforce employed on full-time, permanent contracts has shrunk.

Some of the changes are cyclical, the result of recession followed by a stuttering recovery. The rise in temporary work, for example, might be expected to recede when European economies are again growing strongly enough to bring unemployment down towards its pre-recession level. Other changes, however, are the result of major structural forces operating in the global economy: the rapid pace of technological innovation, globalisation and demographic change. These forces are likely to continue to cause dislocation and disruption in European labour markets for the foreseeable future. As a result, there will be a fundamental shift in the types of jobs that are available for workers and in the skills demanded by employers across Europe. Understanding the likely changes in the European labour market over the next decade is essential if policymakers and firms are to set Europe onto a path towards permanently lower unemployment through the creation of many more well-paid jobs.
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124
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Investing in African Livestock: business opportunities in 2030-2050

Date of Editorial Board meeting: 
Publication date: 
Friday, March 1, 2013
Abstract in English: 
This paper depicts the medium to long term development prospects for the African livestock sector by reviewing data on the estimated consumption of animal-sourced foods and anticipated responses by producers for 2005/07, 2030 and 2050. Data and projections are elaborated by the FAO Global Perspective Studies Unit.
Increases in the demand for animal-sourced food are estimated extraordinarily high in Africa over the coming decades. By 2050, the meat market is projected at 34.8 million tonnes and that of milk about 82.6 million tonnes, an increase of 145 and 155 percent respectively over 2005/07 levels. More notably, over this period, Africa’s increase in volume of meat consumed will be on a par with that of the developed world and that of Latin America, with only South Asia and Southeast Asia anticipated to register higher growth. For milk, only South Asia will register stronger gains in market size than Africa. Furthermore, annual growth rates in both meat and milk consumption are projected to be higher in Africa than in other regions, with the exception of meat in South Asia (from a very low base). Within Africa, beef, milk and poultry are anticipated to provide favourable business opportunities for livestock producers, in both volume and value terms. However, market dynamics differ amongst the geographic hubs, including Western and Southern Africa; Northern and Southern Africa; and Central Africa.
Production will not keep pace with consumption. Africa is anticipated to increasingly become a net importer of animal-sourced foods. This represents a missed development opportunity, given the widespread societal benefits that inclusive growth of livestock can generate, particularly in a continent where the majority of rural dwellers depend fully or partly on livestock for their livelihoods. Consequently, investments, and policy and institutional reforms that target African livestock markets are required to ensure that the business opportunities generated by the growing demand for animal-sourced foods translate into widespread benefits for the population.
Formulating effective livestock sector policies and institutional changes require a flow of information on market conditions and on the constraints to market entry. These are rarely readily available and investments in data collection and in data collection systems should be given appropriate priority, as the basis for supportive policies and investment.2050
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14
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