Despite the rise of populism, the economic scorecard for the last 50 years hasn’t been that bad under the old liberal regime, where half the people who have ever lived, live now. Some extracts from the International Monetary Fund’s (IMF) report “A World of Change” below:
- The world population grew from 3 billion in 1965 to about 7 billion in 2013, but the global economy grew faster than the world population, leading to a better standard of living for the average world citizen
- Improvements in medical technology, sanitation, and vaccination helped reduce the death rate and, despite declining birth rates, the world population has kept rising as people enjoy longer lives. In the mid-1960s, life expectancy at birth was about 55 years; today a new born is expected to live about 70 years.
- The number of children completing primary education increased from 80 percent of the global school-age population in the 1980s to 92 percent in 2012. In low-income countries, this change has been more dramatic—from 45 percent to slightly more than 70 percent in the past three decades.
- The average world citizen is richer than ever thanks to the growth the global economy has enjoyed over the past 50 years. In 1981, the percent of people living on less than $1.25 a day, the extreme poverty line, was about half in both upper-middle- and low-income countries . Thirty years later, upper-middle-income countries have achieved a substantial decline in poverty thanks mostly to rapid growth in emerging market economies.
However, amongst the good news there are enormous issues of poverty, income distribution and climate change. The IMF goes on:
- The benefits of this growth have not been equally distributed. Extreme poverty remains widespread in a number of low-income countries where almost half of the population still lives in extreme poverty. At the global level, more than a billion people, mostly in sub-Saharan Africa and south Asia, are in extreme poverty.
- Inequality has also increased in most countries. For example, from 1990 to 2010, inequality increased in more than two-thirds of countries with data available. The share of income earned by the top 1 percent of the population has risen in most of the major advanced and emerging market economies. For instance, in the USA, the richest 1 percent of the population receives about 18 percent of national income today, compared with about 8 percent 50 years ago.
- A major challenge of a different sort for the global economy is climate change. Carbon dioxide emissions have risen significantly, especially over the past two decades, and appear to have led to a wide range of problems, including rising sea levels, melting glaciers, and more extreme weather events. The number of reported weather-related natural disasters has increased more than three times since the 1960s. In addition to extreme poverty, low-income countries are vulnerable to the risks stemming from climate change. Although there has been progress in regulating global emissions of greenhouse gases over the past 25 years, much more needs to be done to mitigate the adverse effects of climate change.
The global economy has enormous potential to generate a healthy dose of growth in the coming decades. Innovations, well-designed policies, and vibrant emerging market and frontier economies can help realise that potential.
Finally and importantly for the UK also, the Wall Street Journal reports that the longest slide in worker productivity since the late 1970s is haunting the U.S. economy’s long-term prospects, a force that could prompt Federal Reserve officials to keep interest rates low for years to come. Part of the reason is that those with high skills can take advantage of the new technologies, but less skilled/educated workers are confined to lousy jobs, pulling down the average.
Most life improvements have been on the back of technological change such as the industrial revolution. New technologies demand a better educated and/or trained workforce, but the developed world is just not keeping up with the pace of change.
The IMF reminds us of (Nobel absentee !) Bob Dylan in 1964:
“…The slow one now, Will later be fast, As the present now, Will later be past, The order is rapidly fadin’, And the first one now will later be last, For the times they are a-changin’…”