By Kristalina Georgieva, IMF Managing Director, Keynote Speech, King’s College, Cambridge, March the 14^th, 2024

For the sake of human development, in a keynote speech, delivered at King’s College, Cambridge, March the 14^th, 2024, Kristalina Georgieva, IMF Managing Director (IMF-MD), argues that the world requires key global economic policies “to correct what has been most seriously wrong over the last 100 years – the persistence of high economic inequality”.

Inspired by John Maynard Keynes’ essay “Economic Possibilities for Our Grandchildren”, with the same title, the IMF-MD’s keynote speech: summarises the economic and social progress achieved during the past 100 years; presents two alternative scenarios for the next 100 years; and has a conclusive statement for the 21^st century. The following paragraphs reproduce some contents of these topics.

First, assisted by economic integration and international cooperation, technology and capital accumulation drove the economic and social progress captured by the following indicators: an eightfold increase of per-capita global income, although the global population has quadrupled; 1.5 billion people lifted themselves out of poverty, over the past three decades, and hundreds of millions entered the middle class; and life expectancy has risen from circa 40 to 70 years.

Second, the two possible scenarios for the next 100 years, developed by IMF staff, are the “low ambition scenario” and the “high ambition scenario”.

In the “low ambition scenario” – based on “the lower-growth experience of living standards in the 100 years before 1920” – “global GDP would be about three times larger and global living standards twice as high as today”. By contrast, in the “high ambition scenario”, which assumes “the much higher average growth rates from 1920 until now”, “global GDP would be thirteen times larger, and living standards would be nine times higher.”

The latter scenario is the desired and more likely, under the following assumptions: first, more sustainable, equitable and resilient growth; second, enhanced sound macroeconomic fundamentals and financial stability; and, third, open trade and entrepreneurship sustained as major engines of, respectively, growth and innovation and employment.

Assuming that capital will be allocated “to where it is needed most and will make the biggest positive impact”, the “high ambition scenario” requires investment in the following three priority areas: the new climate economy; the next industrial revolution; and people.  

With respect to the new climate economy, there is a need of a “carbon-neutral economy”, which requires “mobilizing trillions of dollars in climate investments for mitigation, adaptation and transition.” These investments would create millions of green jobs, increase innovation, accelerate green-technology transfers to developing economies, and, ultimately, “break the historic link between growth and emissions…”, meaning that “as countries get richer, people enjoy better living standards without hurting our planet.”

In the context of the next industrial revolution, “… innovation in various fields – like quantum computing, nanotechnology, nuclear fusion, virtual reality, new vaccines and gene therapy – is accelerating, transforming the way we live, work, and move, and the way we communicate with each other.”

As a specific case and example, in spite of the associated risks, todays generative AI “may lead to scientific, medical and productivity breakthroughs.” Observing that productivity, “more than anything else, determines the long-term wealth of nations”, then, AI can reduce inequality both within and across countries. But to obtain those gains, “countries must start preparing now”, by “scaling up investment in digital infrastructure, expanding access to retraining and reskilling, and setting up regulatory and ethical foundations of AI.”

Dealing with the investment in people, particularly in Africa, the “greatest dividends are paid here: investing in health and education, in stronger social safety nets, and empowering women economically. This lies at the heart of better and fairer capital accumulation.”

Third and finally, it´s returns on investments in technology, climate, and people – in a world with cooperation defined in the context of a “21^st-century multilateralism” – that underpins her conclusive statement that “a prosperous world in the coming century requires a prosperous Africa.”

Given the strategic nature of the economic and social policies presented by the IMF-MD, the blogger recommends, in particular to African leaders and development community, at large, the reading of “The Economic Possibilities For My Grandchildren, by Kristalina Georgieva, IMF-MD, Keynote Speech, King’s College, Cambridge, March the 14^th, 2024”, published by the IMF Weekend Read, March the 15^th, 2024.

March the 26^th, 2024

* All quotations are from “The Economic Possibilities for My Grandchildren”, by Kristalina Georgieva, IMF Managing Director, Keynote Speech, King’s College, Cambridge, March, the 14^th, 2024.

The Bulletin of Atomic Scientists of the University of Chicago kept, on January, the 23^rd, 2024, the Doomsday Clock at 90 seconds to midnight – the moment of the apocalypse – the closer than it had ever been before. That decision was due, chiefly, not only to the continuing wars in Ukraine and Gaza, but also to climate change and the growth of AI, as a disruptive technology, with potential to, someday, automate war without human intervention.

Thus, a nuclear explosion leading ultimately to the apocalypse is, nowadays, more likely, according to those Atomic Scientists, than at any other time since the Cold War.

It’s, therefore of paramount importance to know the dynamics of the consequences of a nuclear explosion, as presented by a “2022 scientific study”.

The above-mentioned study “found that if 100 Hiroshima-size bombs – less than 1 percent of the estimated global nuclear arsenal – were detonated in certain cities, they could generate more than five million tons of airborne soot, darkening the skies, lowering global temperatures and creating the largest worldwide famine in history. An estimated 27 million people could immediately die, and as many as 255 million people may starve within two years.”

As a result, there is a pressing need, on the one hand, “to remind ourselves of the consequences of a nuclear war in order to avoid them”, and, on the other hand, “to start protesting against nuclear war again”. But both of these actions will only be seriously undertaken, if a deep knowledge of those consequences is acquired and widely shared.

For the acquisition of that knowledge, the blogger recommends rational and nuclear explosion lay people – caring for humankind survival, peace and human development – to read “It’s Time to Protest Nuclear War Again!” by Kathleen Kingsbury, who introduces “At the Brink – A Series about the Threat of Nuclear Weapons in an Unstable World”, by WJ Hanningan, published by the New York Times.

The robust findings and recommendations of the Series are based “on modelling, research and hundreds of hours of interviews with people who have lived through an atomic detonation, dedicated their lives to studying nuclear war or are planning for its aftermath.”

@ All quotations are from “At the Brink – A Series about the Threat of Nuclear Weapons in an Unstable World.”

In this article, Romei, V. sources reputable economists’ thoughts as well as credible international institutions data and estimates to present recent empirical evidence on global increased extreme poverty and worsening inequality among workers and countries,[1] highlighting their likely covid-19 pandemic induced causes, as summarized below:

• Despite the world having faced the worst output decline in modern history, rich countries with developed health systems, better foreign direct investment environment, and enough fiscal and monetary spaces, could protect their economies and workers. In stark contrast, poor (underdeveloped) countries, with weak health systems, and rising public debts combined with losses of export and diaspora remittance earnings, were unable to stimulate their economies;
• Low skilled and unskilled workers lost jobs and incomes, due to the lockdown effects on the hospitality, retail, and informal sectors. Differently, skilled (or well-off) workers shifted to home or remote working and experienced not only relatively stable incomes, but also reductions on transport and leisure spending;
• As a result of the income losses, the declining trends of extreme poverty have been reversed. More than 150 million people are estimated to join the extremely poor population in the world, by 2022;
• Furthermore, among the lasting effects of the job losses, are the decrease of career earnings potential, reduced self-esteem, and increased crime.

To tackle the unemployment problem, the author[2] has a policy recommendation: governments should help workers to reskill and move to growing sectors of the economy. Most economists agree with this policy recommendation, provided that economic growth, which is the necessary condition for poverty reduction and inequality mitigation, occurs on a long-term basis.

But one must take that policy recommendation a step further. To achieve long-term growth with skilled workers, highly mobile inter- and intra-sector and resilient to negative shocks, countries – particularly the underdeveloped ones – need to design and implement robust long term development strategies, with a strong human capital formation pilar, through high quality education, mostly, and reliable and effective health services.

I recommend reading this article for, by dealing with extreme poverty and inequality – clearly, from their effects, two public bads – and a government policy proposal to eradicate them, it has a close relationship with the blog vision.

[1] As well as the corollary of rich-getting-richer and poor-getting-poorer, and correlated savings rate trends.

[2] Through the mind of one of her economist sources.