AMSTERDAM – Since the 2008 financial crisis threw the world economy into a tailspin, there has been much talk about the need to pursue inclusive, sustainable prosperity. Yet policymakers in developed and developing countries alike have largely continued to rely on reactive, one-dimensional strategies aimed at boosting economic growth, instead of adopting a systemic approach that moves beyond output to account for social and environmental objectives. This may be about to change.
A recent report called New Growth Models – produced by the Nobel laureate Michael Spence and an array of distinguished policy and business practitioners, and released at the World Economic Forum’s meeting in Davos – highlights the deficiencies of the current approach. More important, it calls upon policymakers worldwide to commit to new growth models that foster inclusiveness and sustainability, alongside prosperity.
The problems with the world’s current growth trajectory are well documented. The planet is creaking under the burden of a fast-growing and increasingly consumption-hungry human population.
Moreover, despite great strides in poverty reduction – largely a result of China’s unprecedented economic rise over the last three decades – inequality is on the rise worldwide. And the world’s increasing interconnectedness has contributed to increased volatility, as individual countries struggle to address challenges ranging from food security to financial reform. If policymakers continue to focus exclusively on output growth, the global economy’s stability – indeed, its viability – will be seriously threatened.