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N° 2006-16 |
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| October |
| The Long Term Growth Prospects
of the World Economy: Horizon 2050 |
| Sandra Poncet |
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This study develops long-term forecasts for world economic growth, based on a production
function according to which an economy can grow by (1) deploying more inputs (labor and
capital inputs) to production and/or by (2) becoming more efficient, i.e. producing more
output per unit of input. An econometric analysis of past performance is carried out to
describe the process by which physical capital accumulates over time and to estimate the
parameters of a catch-up model of technology diffusion. We moreover account for the
modification of real exchange rates against the US dollar.
The results suggest that today’s advanced economies are to become a shrinking part of the
world economy: in less than 50 years, China and India together could match the size of the
US in current dollars (26.6 against 26.9% of the world GDP in 2050). China and India will
stand out as an engine of new demand growth and spending, their GDP will grow at yearly
average rate of 4.6 and 4.5%, respectively between 2005 and 2050. The largest economies
in the world (by GDP) may no longer be the richest (in terms of income per capita). |
Abstract |
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| Growth projections, emerging countries, human capital, technology
diffusion |
Keywords |
| O1, O4 |
JEL classification |
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