Monday, September 1, 2014

The New Wealth of Nations

Michael Spence

Will an open world economy survive today’s financial crisis? Are the old strategies for growth still viable, or must countries radically alter their policies? Can climate-sensitive growth be achieved? Are big income inequalities inevitable?

The undertow of the impressive wave of wealth creation that preceded the 2008 financial crisis was the unexpected fragility of the new prosperity, as well as a massive increase in inequality between advanced and developing countries – and within individual nations. Part of the damage, exposed when the wave crashed and receded, has been a loss of economic direction almost everywhere.

So what will the post-crisis world ultimately look like? Will countries turn their backs on globalization, and, if so, what will a retreat from economic openness mean for growth? How will the rise of China and India affect the advanced economies? What lessons does the crisis hold for developing countries?

The future is always unpredictable, but it has rarely been as opaque as it is today, when political and economic uncertainty is compounded by a dazzling pace of technological innovation. Only the world’s best minds can help readers distinguish the essential from the superficial and glimpse what is likely to come next.

This is what Michael Spence, a recipient of the 2001 Nobel Prize in Economics, former Professor of Economics at Harvard, and Dean of Stanford Business School, does every month in his series The New Wealth of Nations, written exclusively for Project Syndicate. As Chairman of the Commission on Growth and Development, an international body charged with charting new roads to growth in the wake of the financial crisis, Michael Spence has made it his mission to apply his expertise to help design tomorrow’s global economic architecture. Now, he has chosen Project Syndicate to share what he has learned along the way.

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