Not for publication, broadcast,
or transmission until December 13, 2006, at 12:01am in Washington, DC, which is
5:01 GMT/UTC.
Global Economic Prospects 2007:
Managing the Next Wave of Globalization
Growth Prospects Are Strong, but Social, Environmental Pressures from
Globalization Need More Attention
WASHINGTON, DC, December 13, 2006 — 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
represent 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."
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Global Economic Prospects 2007:
- Complete
report (3.8mb pdf)
- Table
of Contents, Foreword and Overview (595k pdf)
- Ch.1: Prospects
for the Global Economy (885k pdf)
- Ch.2: The
Coming Globalization (730k pdf)
Globalization has been present since the
dawn of modern humans nearly 50,000
years ago in Africa (see Wade 2006). The
Roman Empire stretched from Great Britain
to the Middle East nearly 2,000 years ago and
500 years ago the age of discoveries led to the
expansion of European outreach to the western
hemisphere and East Asia. Two distinct
periods in more modern times are often cited
as intensified phases of globalization—the
20–30 years before World War I and the years
since World War II. Both witnessed sharp increases
in trade, international migration, and
flows of finance, accompanied by rapid
changes in technology—electricity, trains, and
steamships in the first period, and planes,
containers, and telecommunications in the
second. While technology was a key factor,
policies were also important—such as the reductions
in trade and financial barriers. This
section reviews some of the key evidence of
the most recent period of globalization hinting
at what trends can be anticipated over the
next 25 years. The section will highlight
trends in four broad categories that define
globalization—trade in goods and services,
international migration, capital flows, and
technology and information.
- Ch.3: Income
Distribution, Inequality, and Those Left Behind (620k pdf)
Over the past 20 years, the global distribution
of income has undergone significant structural
shifts. While aggregate measures of
global inequality have changed little between
the 1980s and today, the relative positions of
countries and the welfare of millions of the
world’s citizens have experienced much more
dramatic transformations. The sustained high
growth rates of China and India (and to a
lesser extent, those of other Asian nations)
lifted millions out of poverty, while the stagnation
in many African countries caused them
to fall behind. In comparing the world income
distribution in 1980 with that in 2002, one
study notes that the poorest country in 2002
had a lower income per capita than the poorest
country in 1980 (Bourguignon, Levin, and
Rosenblatt 2004). The same is true for the entire
bottom 6 percent of the world income distribution.
Are these trends likely to continue
in the future? Who will be the poor and the
rich of 2030 under the global scenarios developed
in the previous chapter?
- Ch.4: New
Pressures in Labor Markets: Integrating Large Emerging Economies and the
Global Sourcing of Services (455k pdf)
Rapid technological progress, trade in goods,
and international sourcing of services come together
to put new pressures in labor markets,
pressures that will only become more acute in
the next 25 years. Through these channels,
globalization is creating a progressively more
integrated global market for labor. The impact
is tempered by differences in the skills, technology,
and know-how available to workers.
Globalization offers opportunities for export
growth and access to a wider range of
cheaper imported products that can fuel productivity
growth and rising average living
standards. But globalization also imposes
adjustment costs on certain groups within
countries, primarily through labor markets by
influencing wages and job security and by
demanding retraining, and the upheaval of
moving between jobs. The unskilled have seen
their wages worsen relative to skilled workers
and their jobs become less secure. This is true
even in developing countries—contrary to expectations
that the unskilled benefit relative
to the skilled as labor-intensive manufacturing
moves to low-wage countries. The projections
in this report offer little reason to believe that
this will change in the coming decade.
- Ch.5: Managing
the Environmental Risks to Growth (485k pdf)
The gains from growth and globalization
could be undermined by their environmental
side effects. Because increases in production
magnify cross-border pollution, while improvements
in technology make it possible to
expand or intensify the exploitation of scarce
global resources, decisions at the national
level are having a growing impact on other
countries. International institutions will thus
be required to play a larger role in a wide
spectrum of issues—all involving global
public goods—where exclusive reliance on the
decisions of individual governments or the
private market can lead to adverse outcomes.
Such goods include maintaining global security,
keeping the trading system open and
nondiscriminatory, and ensuring global financial
stability. As developing countries enlarge
their role on the global stage, their integration
as full partners in multilateral solutions to
global problems will be essential.
Mitigating climate change, containing
infectious diseases, and preserving marine
fisheries are three additional global public
goods that demonstrate the need for—and
benefits of—international policy cooperation.
Rising industrial output means increasing
concentrations of greenhouse gases in the atmosphere,
which will have detrimental effects
on future productivity and—more generally—
on human welfare around the globe. Even...
- Appendix
(80k pdf)
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