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BASELINE is the database developed by the CEPII in 2010 to picture THE WORLD ECONOMY IN 2050.

Based on a three-factor production function of labour, capital and energy, plus two forms of technological progress, we propose a long-run growth scenario for 147 countries and a time horizon of 2050 relying on the model MaGE (Macroeconometrics of the Global Economy). Our model is fitted with United Nations and International Labour Office labour projections, and econometric estimations of (i) capital accumulation, (ii) savings rate, (iii) relationship between savings and investment rate, (iv) education, (v) female participation, and (vi) technological progress (which includes energy and total factor productivity). Our study provides five novelties. First, we account for energy constraints by including its consumption in the production function and by taking account of rents accruing to oil exporting countries.
Second, we estimate a non-unitary relationship between savings and investment, departing from assumptions of either a closed economy or full capital mobility. Third, we model female participation rates consistently with education catch-up. Fourth, we account for the 2008-09 global crisis by initialising our projection model in 2013 while relying on IMF short-term forecasts between 2010 and 2012. Finally, we disentangle real gross domestic product (GDP) growth rates from relative price effects through a consistent Balassa-Samuelson effect.Our results suggest that the Chinese and Indian economies could grow 8-fold between 2010 and 2050 at constant relative prices. Over the same period, the US and EU economies would inflate by 80-90%. Adjusting for relative prices results in a 18-fold increase in China's economy and a 16-fold increase for India between 2010 and 2050.
Taking account of relative price variations, China would represent 33% of the world economy in 2050, dominating the United States (9%), India (8%), the European Union (12%) and Japan (5%). Our results suggest that in approximately 2020 (or c. 2040 at constant relative prices) China could overtake the United States. However, in terms of living standards, measured as GDP per capita in purchasing power parity, China would still lag 10 percent behind the United States at the 2050 horizon. Finally, from 2040 onwards, Sub-Saharan Africa would become the geographical area with the most dynamic economies, with an annual average growth rate of more than 5%.



Users of BASELINE are kindly asked to cite the reference document and the version of BASELINE used. The reference document is:

Jean FOURE, Agnès BENASSY-QUERE & Lionel FONTAGNE (2012), The Great Shift: Macroeconomic Projections for the World Economy at the 2050 Horizon, CEPII Working paper 2012-03.

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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.