IDEAS home Printed from https://ideas.repec.org/p/oec/ecoaab/22-en.html
   My bibliography  Save this paper

The Long View: Scenarios for the World Economy to 2060

Author

Listed:
  • Yvan Guillemette
  • David Turner

Abstract

This paper presents long-run economic projections for 46 countries, extending the short-run projections of the Spring 2018 OECD Economic Outlook. It first sets out a baseline scenario under the assumption that countries do not carry out institutional and policy reforms. This scenario is then used as a reference point to illustrate the potential impact of structural reforms in alternative scenarios, including better governance and educational attainment in the large emerging-market economies and competition-friendly product market and labour market reforms in OECD economies. Flexibility-enhancing labour market reforms not only boost living standards but, by raising the employment rate, also help alleviate fiscal pressures associated with population ageing. Another scenario illustrates the potential positive impact of linking the pensionable age to life expectancy on the participation rate of older workers, and in particular that of women. Additional scenarios illustrate the potential economic gains from raising public investment and spending more on research and development. A final ‘negative’ scenario shows how slipping back on trade liberalisation – returning to 1990 average tariff rates – might depress standards of living everywhere.

Suggested Citation

  • Yvan Guillemette & David Turner, 2018. "The Long View: Scenarios for the World Economy to 2060," OECD Economic Policy Papers 22, OECD Publishing.
    • Handle: RePEc:oec:ecoaab:22-en
    DOI: 10.1787/b4f4e03e-en
    as

    Download full text from publisher

    File URL: https://doi.org/10.1787/b4f4e03e-en
    Download Restriction: no
    File URL: https://libkey.io/10.1787/b4f4e03e-en?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    2. Philip Stevens & Martin Weale, 2004. "Education and Economic Growth," Chapters, in: Geraint Johnes & Jill Johnes (ed.), International Handbook on the Economics of Education, chapter 4, Edward Elgar Publishing.
    3. Yvan Guillemette & David Turner, 2017. "The fiscal projection framework in long-term scenarios," OECD Economics Department Working Papers 1440, OECD Publishing.
    4. Jean Imbs & Isabelle Mejean, 2015. "Elasticity Optimism," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 43-83, July.
    5. William Nordhaus, 2018. "Evolution of modeling of the economics of global warming: changes in the DICE model, 1992–2017," Climatic Change, Springer, vol. 148(4), pages 623-640, June.
    6. Holston, Kathryn & Laubach, Thomas & Williams, John C., 2017. "Measuring the natural rate of interest: International trends and determinants," Journal of International Economics, Elsevier, vol. 108(S1), pages 59-75.
    7. Balázs Égert, 2018. "Regulation, Institutions and Aggregate Investment: New Evidence from OECD Countries," Open Economies Review, Springer, vol. 29(2), pages 415-449, April.
    8. Balázs Égert & Peter Gal, 2017. "The quantification of structural reforms in OECD countries: A new framework," OECD Journal: Economic Studies, OECD Publishing, vol. 2016(1), pages 91-108.
    9. Andreas Billmeier & Tommaso Nannicini, 2013. "Assessing Economic Liberalization Episodes: A Synthetic Control Approach," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 983-1001, July.
    10. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    11. Claudio Borio & Piti Disyatat & Mikael Juselius & Phurichai Rungcharoenkitkul, 2022. "Why So Low for So Long? A Long-Term View of Real Interest Rates," International Journal of Central Banking, International Journal of Central Banking, vol. 18(3), pages 47-87, September.
    12. Yvan Guillemette & Alexandre Kopoin & David Turner & Andrea De Mauro, 2017. "A revised approach to productivity convergence in long-term scenarios," OECD Economics Department Working Papers 1385, OECD Publishing.
    13. Mastrobuoni, Giovanni, 2009. "Labor supply effects of the recent social security benefit cuts: Empirical estimates using cohort discontinuities," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1224-1233, December.
    14. Daniel Kaufmann & Aart Kraay, 2002. "Growth without Governance," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2002), pages 169-230, August.
    15. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    16. Henrik Braconier & Giuseppe Nicoletti & Ben Westmore, 2015. "Policy challenges for the next 50 years," OECD Journal: Economic Studies, OECD Publishing, vol. 2015(1), pages 9-66.
    17. repec:zbw:bofrdp:2017_036 is not listed on IDEAS
    18. Romain Wacziarg & Karen Horn Welch, 2008. "Trade Liberalization and Growth: New Evidence," The World Bank Economic Review, World Bank, vol. 22(2), pages 187-231, June.
    19. Peter Lloyd & Cassey Lee, 2018. "A Review Of The Recent Literature On The Institutional Economics Analysis Of The Long†Run Performance Of Nations," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 1-22, February.
    20. Annabelle Mourougane & Jarmila Botev & Jean-Marc Fournier & Nigel Pain & Elena Rusticelli, 2016. "Can an Increase in Public Investment Sustainably Lift Economic Growth?," OECD Economics Department Working Papers 1351, OECD Publishing.
    21. Robert Price & Thai-Thanh Dang & Jarmila Botev, 2015. "Adjusting fiscal balances for the business cycle: New tax and expenditure elasticity estimates for OECD countries," OECD Economics Department Working Papers 1275, OECD Publishing.
    22. Yvan Guillemette & Andrea De Mauro & David Turner, 2018. "Saving, investment, capital stock and current account projections in long-term scenarios," OECD Economics Department Working Papers 1461, OECD Publishing.
    23. Jones, C.I., 2016. "The Facts of Economic Growth," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 3-69, Elsevier.
    24. William D. Nordhaus, 2017. "Evolution of Assessments of the Economics of Global Warming: Changes in the DICE model, 1992 – 2017," NBER Working Papers 23319, National Bureau of Economic Research, Inc.
    25. Lutz, Wolfgang & Butz, William P. & KC, Samir (ed.), 2014. "World Population and Human Capital in the Twenty-First Century," OUP Catalogue, Oxford University Press, number 9780198703167.
    26. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    27. Luca Lorenzoni & Fabrice Murtin & Laura-Sofia Springare & Ane Auraaen & Frederic Daniel, 2018. "Which policies increase value for money in health care?," OECD Health Working Papers 104, OECD Publishing.
    28. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    29. Peter Gal & Adam Theising, 2015. "The macroeconomic impact of structural policies on labour market outcomes in OECD countries: A reassessment," OECD Economics Department Working Papers 1271, OECD Publishing.
    30. repec:hal:wpspec:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    31. Geraint Johnes & Jill Johnes (ed.), 2004. "International Handbook on the Economics of Education," Books, Edward Elgar Publishing, number 2847.
    32. Maria Chiara Cavalleri & Yvan Guillemette, 2017. "A revised approach to trend employment projections in long-term scenarios," OECD Economics Department Working Papers 1384, OECD Publishing.
    33. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    34. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    35. Jean Imbs & Isabelle Mejean, 2010. "Trade Elasticities: A Final Report for the European Commission," European Economy - Economic Papers 2008 - 2015 432, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kirsten S. Wiebe & Vibeke S. Norstebø & Fabian R. Aponte & Moana S. Simas & Tina Andersen & Gerardo A. Perez-Valdes, 2023. "Circular Economy and the triple bottom line in Norway," Circular Economy and Sustainability,, Springer.
    2. Feng Shenghao & Philip Adams & Zhang Keyu & Peng Xiujian & Yang Jun, 2020. "Economic Implications of Global Energy Interconnection," Centre of Policy Studies/IMPACT Centre Working Papers g-307, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. Filippo Maria D’Arcangelo & Ilai Levin & Alessia Pagani & Mauro Pisu & Åsa Johansson, 2022. "A framework to decarbonise the economy," OECD Economic Policy Papers 31, OECD Publishing.
    4. Michael Buchner, 2020. "Fiscal Policy in an Age of Secular Stagnation," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(3), pages 398-429, September.
    5. Szunomár, Ágnes, 2019. "A digitális nagy ugrás. Lassulás és modernizációs stratégiaváltás Kínában [The great digital leap. Deceleration and a change in modernisation strategy in China]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1312-1346.
    6. Jakub Sawulski & Iga Magda & Piotr Lewandowski, 2019. "Will the Polish pension system go bankrupt?," IBS Policy Papers 02/2019, Instytut Badan Strukturalnych.
    7. Sergio Mariotti, 2022. "A warning from the Russian–Ukrainian war: avoiding a future that rhymes with the past," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(4), pages 761-782, December.
    8. Manuel Bétin & Tim Bulman & Thomas Chalaux & Boris Cournède & Alain de Serres & Claude Giorno & Yvan Guillemette, 2020. "OECD contribution to the evaluation of the ESM financial assistance programme for Greece," Discussion Papers 12, European Stability Mechanism, revised 27 Oct 2021.
    9. Christine Lewis & Patrice Ollivaud, 2020. "Policies for Switzerland’s ageing society," OECD Economics Department Working Papers 1600, OECD Publishing.
    10. Alexandre Pavlov & Charles Vaillancourt & Michel Poitevin, 2020. "Tarification optimale du gaz carbonique et élasticités dans les transports," CIRANO Project Reports 2020rp-20, CIRANO.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eicher, Theo S. & Schreiber, Till, 2010. "Structural policies and growth: Time series evidence from a natural experiment," Journal of Development Economics, Elsevier, vol. 91(1), pages 169-179, January.
    2. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    3. Eriṣ, Mehmet N. & Ulaṣan, Bülent, 2013. "Trade openness and economic growth: Bayesian model averaging estimate of cross-country growth regressions," Economic Modelling, Elsevier, vol. 33(C), pages 867-883.
    4. Marattin, Luigi & Marzo, Massimiliano & Zagaglia, Paolo, 2013. "Distortionary tax instruments and implementable monetary policy," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 219-243.
    5. Dawood Mamoon & S. Mansoob Murshed, 2006. "Trade Policy, Openness, Institutions," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(1), pages 99-119.
    6. Abdoul’ Mijiyawa, 2013. "Determinants of property rights institutions: survey of literature and new evidence," Economics of Governance, Springer, vol. 14(2), pages 127-183, May.
    7. P. Dorian Owen, 2017. "Evaluating Ingenious Instruments for Fundamental Determinants of Long-Run Economic Growth and Development," Econometrics, MDPI, vol. 5(3), pages 1-33, September.
    8. Congdon Fors, Heather & Olsson, Ola, 2007. "Endogenous institutional change after independence," European Economic Review, Elsevier, vol. 51(8), pages 1896-1921, November.
    9. Elias Papaioannou & Gregorios Siourounis, 2008. "Democratisation and Growth," Economic Journal, Royal Economic Society, vol. 118(532), pages 1520-1551, October.
    10. Eicher, Theo S. & García-Peñalosa, Cecilia & Kuenzel, David J., 2018. "Constitutional rules as determinants of social infrastructure," Journal of Macroeconomics, Elsevier, vol. 57(C), pages 182-209.
    11. Mishkin, Frederic S., 2009. "Globalization and financial development," Journal of Development Economics, Elsevier, vol. 89(2), pages 164-169, July.
    12. Williamson, Claudia R., 2012. "Dignity and development," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(6), pages 763-771.
    13. Carmignani, Fabrizio & Kler, Parvinder, 2018. "Your war, my problem: How conflict in a neighbour country hurts domestic development," Economic Modelling, Elsevier, vol. 70(C), pages 484-495.
    14. Ezcurra, Roberto & Zuazu, Izaskun, 2019. "Political equality and quality of government," MPRA Paper 96476, University Library of Munich, Germany.
    15. Dong, Zhiqiang & Zhang, Yongjing, 2016. "Accumulated social capital, institutional quality, and economic performance: Evidence from China," Economic Systems, Elsevier, vol. 40(2), pages 206-219.
    16. Manuel Bétin & Tim Bulman & Thomas Chalaux & Boris Cournède & Alain de Serres & Claude Giorno & Yvan Guillemette, 2020. "OECD contribution to the evaluation of the ESM financial assistance programme for Greece," Discussion Papers 12, European Stability Mechanism, revised 27 Oct 2021.
    17. Daniel Oto-Peralías & Diego Romero-Ávila, 2013. "Tracing the Link between Government Size and Growth: The Role of Public Sector Quality," Kyklos, Wiley Blackwell, vol. 66(2), pages 229-255, May.
    18. Vieira, Flávio & MacDonald, Ronald & Damasceno, Aderbal, 2012. "The role of institutions in cross-section income and panel data growth models: A deeper investigation on the weakness and proliferation of instruments," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 127-140.
    19. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    20. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2016. "Birthplace diversity and economic prosperity," Journal of Economic Growth, Springer, vol. 21(2), pages 101-138, June.

    More about this item

    Keywords

    conditional convergence; fiscal sustainability; governance reform; labour market reform; long-term growth; long-term projection; retirement age;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:ecoaab:22-en. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/edoecfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.