Globalization could spur faster growth in average incomes in the next 25 years than during 1980-2005, with developing countries playing a central role. However, unless managed carefully, it could be accompanied by growing income inequality and potentially severe environmental pressures, predicts the World Bank. According to Global Economic Prospects 2007: Managing the Next Wave of Globalization, growth in developing countries will reach a near record 7 percent this year. In 2007 and 2008, growth will probably slow, but still likely exceed 6 percent, more than twice the rate in high-income countries, which is expected to be 2.6 percent. On how globalization will shape the global economy over the next 25 years, the report’s ‘central scenario’ predicts that the global economy could expand from $35 trillion in 2005 to $72 trillion in 2030. “While this outcome represents only a slight acceleration of global growth compared to the past 25 years, it is driven more than ever before by strong performance in developing countries,” said Richard Newfarmer, the report’s lead author and Economic Advisor in the Trade Department. “And while exact numbers will undoubtedly turn out to be different, the underlying trends are relatively impervious to all but the most severe or disruptive shocks.” “The number of people living on less than $1 a day could be cut in half, from 1.1 billion now to 550 million in 2030.” said François Bourguignon, Chief Economist and Senior Vice President, Development Economics, the World Bank.
“However, some regions, notably Africa, are at risk of being left behind. Moreover, income inequality could widen within many countries, compounding current concerns over inequality between countries.” |
Continuing integration of markets will make jobs around the world more subject to competitive pressures. “As trade expands and technologies rapidly diffuse to developing countries, unskilled workers around the world – as well as some lower-skilled white collar workers – will face increasing competition across borders,” explained Uri Dadush, Director of the World Bank’s Development Prospect Group. “Rather than trying to preserve existing jobs, governments need to support dislocated workers and provide them with new opportunities. Improving education and labor market flexibility is a key part of the long-run solution.” |
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