The world economy is in a super-cycle. This is a period of historically high global growth, lasting a generation or more.
There are many factors driving this, including rising trade, high rates of investment, rapid urbanisation and technological innovation.
Super-cycles are also characterised by the emergence of economies enjoying rapid growth, such as
The world economy has twice enjoyed super-cycles before. The first, from 1870 to 1913, saw a significant pick-up in global growth, with the world growing on average each year by 2.7%, a full one percent higher than previously seen. That cycle was led by the emergence of the
The second super-cycle, from 1945 to the early 1970s, saw growth averaging 5% and was characterised by the post-war reconstruction and catch-up across large parts of the globe. It saw the emergence both of a large middle-class in the West and of exporting nations across Asia, led by
We may now be in another super-cycle. For people in
The projections would imply a real growth rate of 3.5% for the period between 2000, when the super-cycle started, and 2030, or 3.9% from now till 2030. That would be a significant step-up compared with 2.8% between 1973 and 2000.
What is remarkable is not only the likely scale of this expansion but the fact that these forecasts are based on projections for growth that some might even think are too cautious. For instance,
Just as it is important to focus on near-term challenges, it is also vital to keep sight of longer-term opportunities. During the super-cycle, we believe that
The countries that will succeed will be those with the cash, the commodities and the creativity. In recent years I have described what was happening as the New World Order, reflecting a shift in the balance of economic and financial power from the West to the East.
While still valid, a super-cycle better reflects what is happening. It is still possible for the West to do well in this environment, particularly if economies there are creative. Yet it is
Андерс Ослунд: 10 факторов почему Россия в ближайшие 2-3 года вступит на траекторию высокого роста.
1. The root cause is the profound sense of malaise in the Russian elite. Nothing is better for reform than malaise. Remember how former Soviet leader Mikhail Gorbachev and former Soviet Foreign Minister Eduard Shevardnadze before assuming power told each other: “We cannot go on like this any longer!” Once again,
2. Ideas are also crucial, and a new intellectual paradigm has taken hold. Since February 2008, President Dmitry Medvedev has advocated modernization. While this ambitious idea has dominated the public discourse, little has been done. This contrast between word and action is reminiscent of the
4. One of
5. Money is no longer a free utility for the Kremlin. The oil price has risen above $80 per barrel, but at that level Finance Minister Alexei Kudrin foresees a budget deficit in 2010 of 4.6 percent of GDP, and deficits will continue until 2014. Therefore, the government can no longer simply throw money at problems. It has to actually solve some of them.
6. Energy production has leveled off and is not likely to rise significantly any time soon. Therefore, growth has to come from other sectors. Look at the composition of and trends among leading companies on the RTS or MICEX and you will see how
9. The long absence of any significant reforms has left many low-hanging fruits, such as elementary deregulation. Privatization is becoming inevitable, and it instantly reduces the corruption characteristic of Russian state corporations.
The choice is becoming increasingly clear: Putin symbolizes corruption, energy dependence and stagnation, while Medvedev presents an image of modernization and reform. These alternatives are becoming as crystal clear as in 1985, when the Soviet elite opted for change.
Medvedev has real levers to exert power. Among other things, he possesses a “nuclear option” — at any moment, he can sign an amnesty for former Yukos CEO Mikhail Khodorkovsky, which could significantly change the presidential race in 2012.
In the end, the choice is between a growth rate of 3.5 percent a year or 6.5 percent a year in the medium term. Would big Russian businessmen prefer stagnation of their companies over healthy growth? Why should they ignore their own interests?