5 Trends for the Future of Economic Growth - Agenda - The World Economic Forum

8/18/2019 5 Trends for the Future of Economic Growth - Agenda - The World Economic Forum

1/5

12/1/2015 5 trends for the future of economic growth - Agenda - The World Economic Forum

https://agenda.weforum.org/2015/11/5-trends-for-the-future- of-economic-growth/?utm_content=buffer77675&utm_medium=soci al&utm_source=facebook.com…

Growth in China is slowing, growth in Europe is near zero, and the world as a whole

is now in recession in dollar terms. At the same time, income inequality is rising all

over the world, and political instability is going up, too. Could a return to economic

growth be the cure for these ills? And if so, how do we achieve it?

Peter De Keyzer, chief economist at BNP Paribas Fortis, examined the issue in his

book “Growth Makes You Happy”. Taking a long-term perspective, he starts with a

simple theory: wealth is determined by two factors, population growth and

productivity growth. The latter depends on your ability to innovate. The former is a

result of individual choices and the state of healthcare in a country. But which can

get us back to healthy growth?

1. “Demography is destiny”

It’s simple: the more working age people a country has, the more likely it is to have

economic growth and increasing wealth. As The Economist noted earlier this year,

“people will borrow in their 20s and 30s, save a lot in their 40s and 50s and start

running down their savings in their 60s”. The more working age (age 16-65)

population you have, the more potential contributors to economic growth, both

because of their productivity and their spending.

That helps explain why countries like Italy and Japan, whose populations are

shrinking, have a harder time growing their economy than the U.S. or India, where

the population is still growing. Of course, the choices politicians make, and a

country’s ability to innovate, play a role as well. But to a large extent, the old adage

remains true: “demography is destiny”. In principle, that’s good news for many

GLOBAL REGIONAL INDUSTRY

Demographic Dividend Economic Growth and Social Inclusion Education

5 trends for the future of economic growth

By Peter Vanham

Nov 26 2015

AGENDA SIGN IN SUBSCRIBE

http://www.weforum.org/http://www.weforum.org/https://agenda.weforum.org/https://toplink.weforum.org/http://weforum.us3.list-manage.com/subscribe?u=79c86265202b9840297f805ad&id=7361259375http://weforum.us3.list-manage.com/subscribe?u=79c86265202b9840297f805ad&id=7361259375https://toplink.weforum.org/https://agenda.weforum.org/http://www.weforum.org/https://agenda.weforum.org/people/peter-vanhamhttps://agenda.weforum.org/topic/global-issues/employment-skills-and-human-capital/education/https://agenda.weforum.org/topic/global-issues/economic-growth-and-social-inclusion/https://agenda.weforum.org/topic/global-issues/demographic-dividend/http://www.economist.com/blogs/buttonwood/2015/02/financial-marketshttp://www.amazon.com/Growth-Makes-You-Happy-Optimists/dp/9401419841


2/5



emerging markets, which should continue to see a “natural” economic growth. The

picture below shows you exactly which countries are still having that natural growth,

and which ones don’t:

2. But growing populations also increase the chances for volatile young

demographics

The previous insight does not constitute a call for unbridled population growth,

though. When a country’s population grows too fast, it is likely to run into trouble:

studies show that the higher the percentage of “fighting age” population (16 to 30

year-olds) in a country, the higher its chances for civil unrest, instability and war. The

tipping point is when more than 60% of the population is younger than 30. In that

case, the chance for civil war is a staggering one in two. It helps explain the difficult

transition countries like Congo, Iran, Iraq, Pakistan and Palestine are going through.

3. For a healthy demographic transition, women hold the key

As De Keyzer writes in his book: “Studies show that lower birth rates are in fact the

result of a consistent policy of ensuring the literacy and education of girls (that is, the

future mothers). The literacy, education and emancipation of women are probably

the best strategies for reducing child mortality in the first place, and the birth rate in


3/5



the second. Women are thus the key to a lower birth rate and a successful

demographic transition.”

Can this surprise anyone? When women are better educated, countries are more

likely to see a balanced economic growth, because their demographic transition is

more balanced, too. In such societies, the demographic pyramid is more likely to be

one of “slow expansion” or “low stationary” rather than “fast expansion” (see below).

“Growth Makes You Happy”, Peter De Keyzer, 222p., published by Lannoo, and

available for purchase at Amazon

And that is only the demographic effect. A recent study by the International Monetary

Fund showed the other primary effect of giving more women access to better

education. It said that “increasing education spending by 1% of GDP in India could

boost female labor force participation by 2 percentage points.” Policies in this

vein will ultimately create economic growth that is higher and more balanced. Or asChristine Lagarde put it: “by creating opportunities for women and by promoting their

economic participation, policymakers can also tackle income inequality.”

4. “Necessity is the mother of invention” (Plato)

For countries who no longer have a demographic “dividend” of growing populations,

the only other way to increase their future wealth is to engineer the second economic

growth component: productivity growth. Such is the case for many western countries

today, countries such as Japan and Germany have already passed “peak

population”.

Necessity is the mother of invention, as Plato knew long ago. It is no coincidence

then that the upcoming “Fourth Industrial Revolution” and its accompanying

explosion of productivity seems to take off first in countries like Japan and Germany.

Japan is increasingly inventing robots that have the artificial intelligence to take on a

broad variety of jobs, while Germany leads the push towards “smart factories” in its

industry.

5. The Government with its choices ultimately enables productivity

growth

How do we make sure we reap the benefits from artificial intelligence, robots, and

http://www.wired.co.uk/news/archive/2015-05/21/factory-of-the-futurehttps://agenda.weforum.org/2015/11/5-ways-of-understanding-the-fourth-industrial-revolution/https://www.imf.org/external/np/speeches/2015/102215.htmhttp://www.amazon.com/Growth-Makes-You-Happy-Optimists/dp/9401419841


4/5



Birth Rates Demographic Dividend Demography Economic Growth Economic Growth And Social Inclusion

Education Forum Innovation Population Growth Productivity Growth Technology Wealth Women

Youth

other 21 century productivity enhancers? Productivity growth in the 21st century

largely depends on innovations, and innovations can come about only if you have a

well-educated population, and a considerable amount of research and innovation

centers. As Maria Mazzucato would agree, that in turn depends on the emphasis

governments put on education, research and development. Private companies and

the free market will decide which innovations are worthwhile, but their breeding

ground is the level of education a given country has.

In conclusion, education seems to play a decisive role in getting the world back on

the economic growth track. To ensure demographic growth leads to economic

growth in emerging markets, the emphasis should lie on a smooth demographic

transition. That depends on how well educated women are. To ensure the

demographic decline in the developed world doesn’t lead to an economic slump, an

increased focus on productivity growth is necessary. In the 21 century, that will

come mostly from an increased focus on education, research and development in

general.

Author: Peter Vanham, Senior Media Manager, World Economic Forum

Image: A woman pushes a baby stroller along the Charles River past the Boston

skyline in Cambridge, Massachusetts, United States June 10, 2015.

REUTERS/Brian Snyder

Posted by Peter Vanham - 14:34

All opinions express ed are those of the author. The World Economic Forum Blog is an independent and neutral platform

dedicated to generating debate around the key topics that shape global, regional and industry agendas.

Comments are closed.

Related posts

Suggested next articles

Follow Us

1K+ 230

st

st

How will climatechange affect jobs?

SHARAN BURROW

What does reservecurrency status

HUI FENG

You like this

World Economic Forum860,606 likes

Liked Sign Up

https://www.facebook.com/worldeconomicforum/https://www.facebook.com/worldeconomicforum/https://www.facebook.com/worldeconomicforum/https://www.facebook.com/pradeep.gprhttps://www.facebook.com/tao.sug.9https://www.facebook.com/jjarquinhttps://www.facebook.com/lekh123https://www.facebook.com/rodrigo.carballo.3304https://www.facebook.com/nmthuhttps://www.facebook.com/Bachehaye.Razihttps://agenda.weforum.org/people/hui-fenghttps://agenda.weforum.org/2015/12/what-does-reserve-currency-status-mean-for-china-and-the-world/https://agenda.weforum.org/people/sharan-burrowhttps://agenda.weforum.org/2015/12/how-will-climate-change-affect-jobs/https://agenda.weforum.org/2015/11/5-trends-for-the-future-of-economic-growth/?share=linkedin&nb=1https://agenda.weforum.org/2015/11/5-trends-for-the-future-of-economic-growth/?share=twitter&nb=1https://agenda.weforum.org/2015/11/5-trends-for-the-future-of-economic-growth/?share=facebook&nb=1https://www.facebook.com/worldeconomicforumhttps://agenda.weforum.org/people/peter-vanhamhttp://marianamazzucato.com/https://agenda.weforum.org/tag/youth-2/https://agenda.weforum.org/tag/women/https://agenda.weforum.org/tag/wealth/https://agenda.weforum.org/tag/technology-2/https://agenda.weforum.org/tag/productivity-growth/https://agenda.weforum.org/tag/population-growth-3/https://agenda.weforum.org/tag/innovation-2/https://agenda.weforum.org/tag/forum/https://agenda.weforum.org/topic/global-issues/employment-skills-and-human-capital/education/https://agenda.weforum.org/topic/global-issues/economic-growth-and-social-inclusion/https://agenda.weforum.org/tag/economic-growth/https://agenda.weforum.org/tag/demography/https://agenda.weforum.org/topic/global-issues/demographic-dividend/https://agenda.weforum.org/tag/birth-rates/


5/5



Forum on Twitter

Expand

Do batteries hold the key to the future of

#renewables? wef.ch/1NdTwqE #climatechange

pic.twitter.com/GBobSF20iS

World Economic Forum

@wef

Expand

What's happened to world #trade?

wef.ch/1O0zP1T #globalisation #economics

pic.twitter.com/1c0C7Ufa45

World Economic Forum

@wef

19m

1h

Communities

Strategic Partners

Industry Partners

Foundation Partners

Global Agenda Councils

Global Growth Companies

Global Leadership Fellows

Technology Pioneers

Schwab Foundation

Young Global Leaders

Global Shapers

Women Leaders and Gender

Parity

Civil Society

Academic N etworks

Reports

Global Risks Report

Global Competitiveness Report

Global Gender Gap Report

Useful links

Events

Annual Meeting 2 015

Annual Meeting o f the N ew

Champions 2015

About us

Our Mission

Leadership and Governance

Our Members

History

Klaus Schwab

Careers

Contact Us

Open Forum

World Economic Forum USA

中文

日本語

Privacy & Terms of Use

Access

IBC area

IMC area

Strategic Partners’ area

Partner Institutes’ area

Sitemap

Home

Blog

Reports

Events

Projects

Communities

Media

NewsCommunity News

Event News

Forum News

Issue News

Report News

Media Advisory

Videos

Press

Fictitious e-mail warning

Subscribe

Committed to improving the state of the world
http://twitter.com/wef/status/671886643490594816/photo/1http://twitter.com/wef/status/671886643490594816/photo/1http://twitter.com/wef/status/671886643490594816/photo/1http://twitter.com/wef/status/671886643490594816/photo/1http://twitter.com/wef/status/671886643490594816/photo/1http://twitter.com/wef/status/671886643490594816/photo/1http://twitter.com/wef/status/671886643490594816/photo/1http://twitter.com/Wefhttps://twitter.com/hashtag/renewables?src=hashhttps://t.co/LwRorIjs0Uhttps://twitter.com/hashtag/climatechange?src=hashhttps://twitter.com/hashtag/climatechange?src=hashhttp://www.weforum.org/content/pages/subscribe-forum-newshttp://www.weforum.org/content/pages/alert-fictitious-forum-e-mailshttp://www.weforum.org/presshttps://www.youtube.com/user/WorldEconomicForum/videoshttps://agenda.weforum.org/news/category/media-advisory/https://agenda.weforum.org/news/category/report-news/https://agenda.weforum.org/news/category/issue-news/https://agenda.weforum.org/news/category/forum-news/https://agenda.weforum.org/news/category/event-news/https://agenda.weforum.org/news/category/community-news/https://agenda.weforum.org/news/http://www.weforum.org/communitieshttp://www.weforum.org/projectshttp://www.weforum.org/eventshttp://www.weforum.org/reportshttps://agenda.weforum.org/http://www.weforum.org/https://private.weforum.org/community/partner-instituteshttps://private.weforum.org/https://private.weforum.org/community/international-media-councilhttps://private.weforum.org/community/international-business-councilhttp://www.weforum.org/privacy-terms-usehttp://www.weforum.jp/http://chinese.weforum.org/http://www.weforum.org/world-economic-forum-usahttp://www.openforumdavos.ch/https://agenda.weforum.org/contact/http://www.weforum.org/careershttp://www.weforum.org/professor-klaus-schwab-founder-and-executive-chairmanhttp://www.weforum.org/historyhttp://www.weforum.org/our-membershttp://www.weforum.org/content/leadership-teamhttp://www.weforum.org/world-economic-forumhttp://www.weforum.org/events/annual-meeting-new-champions-2015http://www.weforum.org/events/world-economic-forum-annual-meeting-2015http://www.weforum.org/issues/global-gender-gaphttp://www.weforum.org/issues/global-competitivenesshttp://www.weforum.org/issues/global-riskshttp://www.weforum.org/academic-networkshttp://www.weforum.org/community/civil-societyhttp://www.weforum.org/women-leaders-and-gender-parityhttp://www.weforum.org/community/global-shapershttp://www.weforum.org/community/forum-young-global-leadershttp://www.schwabfound.org/http://www.weforum.org/community/technology-pioneershttp://www.weforum.org/community/global-leadership-fellowshttp://www.weforum.org/community/global-growth-companieshttp://www.weforum.org/community/global-agenda-councilshttp://www.weforum.org/community/foundation-membershttp://www.weforum.org/industry-partner-groupshttp://www.weforum.org/strategic-partnershttps://twitter.com/wef/status/671886643490594816https://twitter.com/wef/status/671899848686309376https://twitter.com/wefhttp://twitter.com/wef/status/671886643490594816/photo/1https://t.co/1c0C7Ufa45https://twitter.com/hashtag/economics?src=hashhttps://twitter.com/hashtag/globalisation?src=hashhttps://t.co/1rM84flMN4https://twitter.com/hashtag/trade?src=hashhttps://twitter.com/wef/status/671899848686309376https://twitter.com/wefhttp://twitter.com/wef/status/671899848686309376/photo/1https://t.co/GBobSF20iShttps://twitter.com/hashtag/climatechange?src=hashhttps://t.co/LwRorIjs0Uhttps://twitter.com/hashtag/renewables?src=hashhttps://twitter.com/wef/status/671901762379522054http://twitter.com/Wef

5 Trends for the Future of Economic Growth - Agenda - The World Economic Forum

Documents

Transcript of 5 Trends for the Future of Economic Growth - Agenda - The World Economic Forum