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Rich country growth will slow, US will be outspent on defense, and electricity consumption will double, paper also forecasts
Economic growth is likely to end extreme poverty before 2050, a new report by the Center for Global Development finds.
The paper by Charles Kenny and Zack Gehan, titled “Scenarios for Future Global Growth to 2050,” created projections of the future of the world economy over the next 30 years, taking into account demographic and education trends as well as the effects of climate change. They found that, though there is considerable uncertainty about the shape of the world economy, the likely future appears to be one of a richer planet with more resources to respond to challenges like pandemics and climate shocks, and containing fewer people living in absolute poverty than ever in history. They also found that in almost every scenario, the US and other high-income countries make up a smaller share of the world economy.
“We know the world is going to look very different in 2050, and climate change is a huge concern for the future” said Kenny, a senior fellow at CGD. “But we can't let it overshadow the fact that continued economic growth should leave almost no one in the most desperate poverty that was the lot of the vast majority of humanity for most of history, albeit decades after it could have been eradicated.”
Some likely outcomes found using the report’s model include:
- The plausibility that $2.15 a day poverty will have effectively disappeared by 2050 (which would be good news, if two decades later than envisaged by the UN Sustainable Development Goals). It is also plausible that more than two thirds of the world will be living on more than $10 a day (up from about 42 percent today). Low-income countries may disappear as a group, and the proportion of the world living in high income countries is very likely to more than double from its current proportion of 16 percent.
- Demographic change will be an increasing drag on growth, particularly in richer (upper middle and high-income) countries. Education is likely to be a factor favoring convergence globally. And while climate change (at least as reflected in temperature, at the national level) will be a force for slower growth especially in poorer countries, it is unlikely to be a major driver of global economic trends up to 2050.
- The share of OECD DAC (traditional donor) countries in the global economy is very likely to shrink. This reflects the likelihood of (i) relatively slower per capita income growth (both compared to the past and to poorer countries); and (ii) stalling or declining population compared to continued population growth in most low- and middle-income countries.
- The shrinking share of the US in the global economy suggests an end to the country’s veto power in both IMF and World Bank decision making processes unless those institutions move even further away from a voting/shareholding formula based on relative economic size.
- Global electricity consumption can be reasonably expected to double by 2050. While high income countries will see slow consumption growth, current low-income countries will still be responsible for less than five percent of electricity consumption (more likely two percent) in 2050.
- The US is likely to remain the largest military in terms of spending in 2050, but its global lead will considerably diminish, and it is plausible to imagine both India and China outspending the US on defense in 2050.
“Any forecasts will always be at the mercy of unforeseeable events, and ours are based on a very simple model of a very complex world, yet some reasonably robust conclusions can be drawn about the not-too-distant future,” said Kenny. “Scenario exercises like these help distinguish closer-to-certainties from more-likely-unknowns, and can help think through future approaches to global governance, business expansion, climate policy, and beyond.”
The paper uses a variety of scenarios developed by the authors, similar to the Shared Socioeconomic Pathways (SSPs) used by the Intergovernmental Panel on Climate Change, to help project the shape of the global economy in 2050. These scenarios build on a forecast of economic growth built around income, population, education and temperature. Results that hold across those scenarios are likely more robust to uncertainty about the future.
CGD also published a series of blog posts examining key findings from the report, including looking at how much progress against poverty can be made by 2050, advocating for a more rational approach to global income classifications, and how the US economic situation in 2050 will affect the world. They can be found here.
The report is part of a larger project, led by Kenny, attempting to anticipate what the world of 2050 will look like and its implications for a host of development issues. Previous working papers looked at infrastructure spending and education as well as demographic change.
Read the new report, Scenarios for Future Global Growth to 2050.