Terry McKinley and Giovanni Cozzi Centre for Development Policy and Research (CDPR) School of...
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Terry McKinley and Giovanni Cozzi Centre for Development Policy and Research (CDPR) School of Oriental and African Studies (SOAS) University of London AUGUR stakeholder’s workshop, 17-18 November 2011 DG Research and Innovation, CDMA building, 21 rue Champ de Mars, Brussels AUGUR A WORLD A WORLD TRAPPED INTO DEBT TRAPPED INTO DEBT AUGUR SCENARIO 1 AUGUR SCENARIO 1
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Transcript of Terry McKinley and Giovanni Cozzi Centre for Development Policy and Research (CDPR) School of...
Terry McKinley and Giovanni CozziCentre for Development Policy and Research (CDPR)
School of Oriental and African Studies (SOAS)University of London
AUGUR stakeholder’s workshop, 17-18 November 2011
DG Research and Innovation, CDMA building, 21 rue Champ de Mars, Brussels AUGUR
A WORLD A WORLD TRAPPED INTO DEBTTRAPPED INTO DEBT
AUGUR SCENARIO 1AUGUR SCENARIO 1
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
Continued Fiscal Consolidation in developed countries: Budget Deficits limited to -3% of GDP in European blocs
Debt stock reduced also in other developed countries (such as to 60% of GDP in the US)
Government Revenue is allowed to decline in Europe, US and Other Developed Countries
Revenue/GDP drops to 15% in the US & 20% in most European Blocs
There is a consequent drop of private investment in Central and North Europe and reduced intra-Europe migration
Multinationals tend to move Industrial Production and Exports to other regions, such as South America and India
SCENARIO 1 ASSUMPTIONS
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
The pervasive influence of Global Markets continues to increase
National and International Governments have a declining influence over economic and financial developments
Global Investors and Corporate Management determine the availability of finance and the distribution of economic growth
Any improvements in the Environment are driven mainly by slow growth in developed countries and continued high oil prices
There is no concerted effort to achieve Greater Inclusiveness of Economic Growth, regionally (within Europe) or globally
Developing Countries continue to grow at a faster rate than Developed Countries—although some, such as China, slow down
SCENARIO 1 BACKGROUND ASSUMPTIONS
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
20
30
40
50
60
70
80
80 85 90 95 00 05 10 15 20 25 30
Central Europe
30
40
50
60
70
80
90
100
110
80 85 90 95 00 05 10 15 20 25 30
East Europe
20
40
60
80
100
120
140
160
80 85 90 95 00 05 10 15 20 25 30
South Europe
30
40
50
60
70
80
80 85 90 95 00 05 10 15 20 25 30
North Europe
150%
107%74%
61%
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
40
50
60
70
80
90
100
110
80 85 90 95 00 05 10 15 20 25 30
UK
30
40
50
60
70
80
90
80 85 90 95 00 05 10 15 20 25 30
USA
0
40
80
120
160
200
80 85 90 95 00 05 10 15 20 25 30
Japan
48
52
56
60
64
68
72
76
80
80 85 90 95 00 05 10 15 20 25 30
Other Developed
125%
91% 66%
62%
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
16
17
18
19
20
21
22
23
24
25
80 85 90 95 00 05 10 15 20 25 30
GOV. INCOME GOV. EXPENDITURE
Central Europe
16
18
20
22
24
26
28
30
80 85 90 95 00 05 10 15 20 25 30
GOV. INCOME GOV. EXPENDITURE
East Europe
10
12
14
16
18
20
22
24
26
80 85 90 95 00 05 10 15 20 25 30
GOV. INCOME GOV. EXPENDITURE
South Europe
14
16
18
20
22
24
26
28
80 85 90 95 00 05 10 15 20 25 30
GOV. INCOME GOV. EXPENDITURE
UK
-1.7%
-1.5%
-3.0%
-2.1%
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
-3
-2
-1
0
1
2
3
4
5
6
80 85 90 95 00 05 10 15 20 25 30
Central Europe
-12
-10
-8
-6
-4
-2
0
2
4
80 85 90 95 00 05 10 15 20 25 30
East Europe
-8
-6
-4
-2
0
2
80 85 90 95 00 05 10 15 20 25 30
South Europe
-4
-3
-2
-1
0
1
2
3
4
80 85 90 95 00 05 10 15 20 25 30
UK
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
-6
-4
-2
0
2
4
6
80 85 90 95 00 05 10 15 20 25 30
Central Europe
-8
-6
-4
-2
0
2
4
6
8
80 85 90 95 00 05 10 15 20 25 30
East Europe
-6
-4
-2
0
2
4
6
80 85 90 95 00 05 10 15 20 25 30
South Europe
-6
-4
-2
0
2
4
6
80 85 90 95 00 05 10 15 20 25 30
North Europe
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
-6
-4
-2
0
2
4
6
80 85 90 95 00 05 10 15 20 25 30
UK
-4
-2
0
2
4
6
8
80 85 90 95 00 05 10 15 20 25 30
USA
-6
-4
-2
0
2
4
6
8
80 85 90 95 00 05 10 15 20 25 30
Japan
0
4
8
12
16
20
80 85 90 95 00 05 10 15 20 25 30
China
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
-2
0
2
4
6
8
10
12
80 85 90 95 00 05 10 15 20 25 30
India
-15
-10
-5
0
5
10
15
80 85 90 95 00 05 10 15 20 25 30
CIS
-3
-2
-1
0
1
2
3
4
5
80 85 90 95 00 05 10 15 20 25 30
World GDP at market rates
-2
0
2
4
6
8
10
12
80 85 90 95 00 05 10 15 20 25 30
Other Africa
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
58
60
62
64
66
68
70
80 85 90 95 00 05 10 15 20 25 30
Central Europe
52
54
56
58
60
62
64
66
68
80 85 90 95 00 05 10 15 20 25 30
East Europe
50
52
54
56
58
60
62
64
80 85 90 95 00 05 10 15 20 25 30
South Europe
64
65
66
67
68
69
70
71
72
80 85 90 95 00 05 10 15 20 25 30
UK
69%
69%
54%
56%
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
58
60
62
64
66
68
70
80 85 90 95 00 05 10 15 20 25 30
Central Europe
64
65
66
67
68
69
70
71
80 85 90 95 00 05 10 15 20 25 30
East Europe
62
63
64
65
66
67
68
80 85 90 95 00 05 10 15 20 25 30
South Europe
60
61
62
63
64
65
66
67
80 85 90 95 00 05 10 15 20 25 30
UK
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
12
14
16
18
20
22
24
26
28
80 85 90 95 00 05 10 15 20 25 30
Central Europe
8
10
12
14
16
18
20
22
80 85 90 95 00 05 10 15 20 25 30
East Europe
12
14
16
18
20
22
24
80 85 90 95 00 05 10 15 20 25 30
South Europe
14
15
16
17
18
19
20
21
22
80 85 90 95 00 05 10 15 20 25 30
UK
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
80 85 90 95 00 05 10 15 20 25 30
Central Europe
-.5
-.4
-.3
-.2
-.1
.0
.1
80 85 90 95 00 05 10 15 20 25 30
East Europe
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
80 85 90 95 00 05 10 15 20 25 30
South Europe
-.04
.00
.04
.08
.12
.16
.20
.24
80 85 90 95 00 05 10 15 20 25 30
UK
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
REDUCTIONS IN GOVERNMENT EXPENDITURES
While the elderly dependency ratio is rising, government expenditures are falling: what is the impact?
We use a composite index, the Government Service Standard, to gauge the impact of expenditure cuts on dependants
Government expenditures are compared to a weighted population index (for the elderly, children and the working-age population)
Then this ratio of public expenditures per population index is compared to general income per capita
The Results for Europe: There is a declining trend across the various blocs
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
12
13
14
15
16
17
80 85 90 95 00 05 10 15 20 25 30
Central Europe
14
15
16
17
18
19
20
80 85 90 95 00 05 10 15 20 25 30
East Europe
12
13
14
15
16
17
18
80 85 90 95 00 05 10 15 20 25 30
South Europe
12
13
14
15
16
17
18
80 85 90 95 00 05 10 15 20 25 30
UK
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
Conflicting Effects on Energy Use and Carbon Emissions: Slow Growth in Developed Countries but Faster Growth in Developing
Countries (along with a rising share of Global GDP)
A High and Rising Price of Oil both slows growth and energy use
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
WITHIN EUROPE
EUROPE AND OTHER BLOCS
AUGUR stakeholder’s workshop, 17-18 November 2011
AUGUR
The results of this scenario are not promising: Growth is slow and debt reduction unimpressive in Developed
Countries
Employment is reduced and Government income and services decline
Developing Countries maintain more rapid growth rates, as global investment shifts towards them
But energy intensity and emissions do not decline globally
In terms of income per capita, East Asia gains on Developed Countries but South Asia and Africa lag far behind, leaving pronounced global inequalities unresolved
CONCLUDING REMARKS
