The Economic Possibilities for My Grandchildren*

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.