{"id":29903,"date":"2018-01-19T08:29:25","date_gmt":"2018-01-19T13:29:25","guid":{"rendered":"http:\/\/olduvai.ca\/?p=29903"},"modified":"2018-01-19T08:30:18","modified_gmt":"2018-01-19T13:30:18","slug":"the-missing-ingredients-of-growth","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=29903","title":{"rendered":"The Missing Ingredients of Growth"},"content":{"rendered":"

The Missing Ingredients of Growth<\/a><\/h3>\n
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Several positive macroeconomic trends suggest that the global economy could finally be in a position to achieve sustained and inclusive growth. But whether that happens will depend on whether governments can muster a more forceful response to changing economic and technological conditions.<\/section>\n
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MILAN\/NEW YORK \u2013 Most of the global economy is now subject to positive economic trends: unemployment is falling, output gaps are closing, growth is picking up, and, for reasons that are not yet clear, inflation remains below the major central banks\u2019 targets. On the other hand, productivity growth remains weak, income inequality is increasing, and less educated workers are struggling to find attractive employment opportunities.<\/p>\n

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After eight years of aggressive stimulus, developed economies are emerging from an extended deleveraging phase that naturally suppressed growth from the demand side. As the level and composition of debt has been shifted, deleveraging pressures have been reduced, allowing for a synchronized global expansion.<\/p>\n<\/div>\n<\/div>\n

Still, in time, the primary determinant of GDP growth \u2013 and the inclusivity of growth patterns \u2013 will be gains in productivity. Yet, as things stand, there is ample reason to doubt that productivity will pick up on its own. There are several important items missing from the policy mix that cast a shadow over the realization of both full-scale productivity growth and a shift to more inclusive growth patterns.<\/p>\n

First, growth potential can\u2019t be realized without sufficient human capital. This lesson is apparent in the experience of developing countries, but it applies to developed economies, too. Unfortunately, across most economies, skills and capabilities do not seem to be keeping pace with rapid structural shifts in labor markets. Governments have proved either unwilling or unable to act aggressively in terms of education and skills retraining or in redistributing income. And in countries like the United States, the distribution of income and wealth is so skewed that lower-income households cannot afford to invest in measures to adapt to rapidly changing employment conditions.<\/p>\n

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