The Economic Possibilities for My Grandchildren*<\/a><\/strong><\/p>\n

By Kristalina Georgieva, IMF Managing Director, Keynote Speech, King\u2019s College, Cambridge, March the 14^{th<\/sup>, 2024<\/p>\n}

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For the sake of human development, in a keynote speech, delivered at King\u2019s College, Cambridge, March the 14^{th<\/sup>, 2024, Kristalina Georgieva, IMF Managing Director (IMF-MD), argues that the world requires key global economic policies \u201cto correct what has been most seriously wrong over the last 100 years \u2013 the persistence of high economic inequality\u201d.<\/p>\n}

Inspired by John Maynard\u00a0Keynes\u2019\u00a0essay \u201cEconomic Possibilities for Our Grandchildren<\/em>\u201d, with the same title, the IMF-MD\u2019s 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<\/sup> century. The following paragraphs reproduce some contents of these topics.<\/p>\n}

First, assisted by economic integration and international cooperation, technology and capital accumulation drove the economic and social progress<\/em> 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.<\/p>\n

Second, the two possible scenarios<\/em>\u00a0for the next 100 years, developed by IMF staff, are the \u201clow ambition scenario\u201d and the \u201chigh ambition scenario\u201d.<\/p>\n

In the \u201clow ambition scenario\u201d \u2013 based on \u201cthe lower-growth experience of living standards in the 100 years\u00a0before\u00a01920\u201d \u2013 \u201cglobal GDP would be about three times larger and global living standards twice as high as today\u201d. By contrast, in the \u201chigh ambition scenario\u201d, which assumes \u201cthe much higher average growth rates from 1920 until now\u201d, \u201cglobal GDP would be\u00a0thirteen times\u00a0larger, and living standards would be\u00a0nine times\u00a0higher.\u201d<\/p>\n

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.<\/p>\n

Assuming that capital will be\u00a0allocated \u201cto\u00a0where it is needed most and will make the biggest positive impact\u201d, the \u201chigh ambition scenario\u201d requires investment in the following three priority areas: the new climate economy; the next industrial revolution; and people. \u00a0<\/em><\/p>\n

With respect to the new climate economy<\/em>, there is a need of a \u201ccarbon-neutral economy\u201d, which requires \u201cmobilizing trillions of dollars in climate investments for mitigation, adaptation and transition.\u201d These investments would create millions of green jobs, increase innovation, accelerate green-technology transfers to developing economies, and, ultimately, \u201cbreak the historic link between growth and emissions\u2026\u201d, meaning that \u201cas countries get richer, people enjoy better living standards without hurting our planet.\u201d<\/p>\n

In the context of the next industrial revolution<\/em>, \u201c\u2026 innovation\u00a0in various fields \u2013 like quantum computing, nanotechnology, nuclear fusion, virtual reality, new vaccines and gene therapy \u2013 is\u00a0accelerating, transforming the way we live, work, and move, and the way we communicate with each other.\u201d<\/p>\n

As a specific case and example, in spite of the associated risks, todays generative\u00a0AI \u201cmay lead to scientific, medical and productivity breakthroughs.\u201d Observing that productivity, \u201cmore than anything else,\u00a0determines the\u00a0long-term\u00a0wealth of nations\u201d, then, AI can reduce inequality both within and across countries. But to obtain those gains, \u201ccountries must start preparing now\u201d, by \u201cscaling up investment in digital infrastructure, expanding access to retraining and reskilling, and setting up regulatory and ethical foundations of AI.\u201d<\/p>\n

Dealing with the investment in people, <\/em>particularly in Africa, the \u201cgreatest dividends are paid here: investing in health and education, in stronger social safety nets, and empowering women economically.\u00a0This lies at the heart of better and fairer capital accumulation.\u201d<\/p>\n

Third and finally, it\u00b4s returns on investments in technology, climate, and people \u2013 in a world with cooperation defined in the context of a \u201c21^{st<\/sup>-century multilateralism\u201d \u2013 that underpins her conclusive statement<\/em> that \u201ca prosperous world in the coming century requires a prosperous Africa.\u201d<\/p>\n}

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 \u201cThe Economic Possibilities For My Grandchildren<\/em>, by Kristalina Georgieva, IMF-MD, Keynote Speech, King\u2019s College, Cambridge, March the 14^{th<\/sup>, 2024\u201d, published by the IMF Weekend Read, March the 15th<\/sup>, 2024.<\/p>\n}

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March<\/strong> the 26^{th<\/sup>, 2024<\/p>\n}

*<\/a> All quotations are from \u201cThe Economic Possibilities for My Grandchildren<\/em>\u201d, by Kristalina Georgieva, IMF Managing Director, Keynote Speech, King\u2019s College, Cambridge, March, the 14^{th<\/sup>, 2024.<\/span><\/p>\n}

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