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The Global Economy in 2030 Trends and Strategies for Europe

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The Global Economy in 2030 Trends and Strategies for Europe THE GLOBAL ECONOMY IN 2030 TRENDS AND STRATEGIES FOR EUROPE DANIEL GROS AND CINZIA ALCIDI WITH CONTRIBUTIONS BY ARNO BEHRENS, CEPS STEVEN BLOCKMANS, CEPS MATTHIAS BUSSE, CEPS CHRISTIAN EGENHOFER, CEPS LIONEL FONTAGNÉ, CIREM ARNAUD FOUGEYROLLAS, SEURECO GILLES KOLEDA, SEURECO ILARIA MASELLI, CEPS MARIA PRISCILA RAMOS, CIREM CARLO SESSA, ISIS PAUL ZAGAMÉ, SEURECO CENTRE FOR EUROPEAN POLICY STUDIES (CEPS) BRUSSELS The Centre for European Policy Studies (CEPS) is an independent policy research institute in Brussels. Its mission is to produce sound policy research leading to constructive solutions to the challenges facing Europe. The views expressed in this book are entirely those of the authors and should not be attributed to CEPS or any other institution with which they are associated or to the European Union. This CEPS report was commissioned by the European Strategy and Policy Analysis System (ESPAS) – an inter-institutional initiative of the European Commission, European Parliament, Council of the European Union and the European External Action Service – with full respect for the intellectual independence of CEPS. The preparation of the study was closely monitored by an ad-hoc inter-institutional Steering Group (backed up by a dedicated Working Group), which guided the process and gave appropriate feedback at regular intervals. The findings of this report are the responsibility of the Centre for European Policy Studies (CEPS), and do not necessarily express the opinions of the EU institutions or any of the other organisations with which the contributors are affiliated. © European Union, 2013. Reproduction is authorised provided the source is acknowledged. ISBN: 978-92-7929-721-2 / Catalogue number: NJ-30-13-614-EN-C All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the European Union. Centre for European Policy Studies Place du Congrès 1, B-1000 Brussels Tel: (32.2) 229.39.11 Fax: (32.2) 219.41.51 E-mail: [email protected] Internet: www.ceps.eu Contents Preface ............................................................................................................................................................................ i Executive Summary ..................................................................................................................................................... 1 1. Introduction ......................................................................................................................................................... 5 Part I. Global Drivers of Growth ...................................................................................................... 8 2. Population and human capital ........................................................................................................................... 8 2.1 World population dynamics................................................................................................................... 8 2.2 Working age population and labour force ......................................................................................... 12 2.3 Quantity versus quality ......................................................................................................................... 13 2.4 Migration ................................................................................................................................................ 15 2.5 Urbanisation ........................................................................................................................................... 16 3. Capital and capital markets .............................................................................................................................. 19 3.1 Investment and capital accumulation as drivers of growth ............................................................ 19 3.2 The longer-term effects of high investment rates ............................................................................ 20 3.3 Savings versus investment.................................................................................................................... 21 3.4 Finance: A roadblock to recovery or a necessary ingredient of development? ........................... 22 3.5 Conclusions ............................................................................................................................................ 23 4. Globalisation ...................................................................................................................................................... 23 4.1 Trade ....................................................................................................................................................... 23 4.2 Global value-added chains: A revolution of trade patterns? .......................................................... 28 4.3 Investment flows ................................................................................................................................... 33 4.4 Longer-term trends in trade and financial globalisation ................................................................. 36 4.5 Conclusions ............................................................................................................................................ 38 5. Technology and innovation ............................................................................................................................. 39 5.1 Total factor productivity ...................................................................................................................... 39 5.2 Our predictions ...................................................................................................................................... 41 5.3 The impact of breakthrough technologies ........................................................................................ 43 5.4 Advanced technologies will not destroy jobs ................................................................................... 45 6. Natural resources: Energy and metals ........................................................................................................... 47 6.1 Energy ..................................................................................................................................................... 50 6.2 Metals ...................................................................................................................................................... 50 6.3 Water ....................................................................................................................................................... 51 6.4 The predictions of the model .............................................................................................................. 53 6.5 Shale gas and 2030 horizons for natural gas in Europe and the world ........................................ 54 6.6 Shale gas bonanza: Re-industrialisation or de-industrialisation? .................................................... 58 6.7 Energy resources: The sky (or rather the atmosphere) is the limit! .............................................. 60 6.8 Conclusions ............................................................................................................................................ 61 Part II. Economic Growth and Prosperity in 2030 ........................................................................ 62 7. The state of the global economy in 2030 ...................................................................................................... 62 7.1 Sensitivity analysis of the model ......................................................................................................... 66 7.2 Conclusions ............................................................................................................................................ 71 8. The impact of growth on affluence and poverty ......................................................................................... 73 9. The impact of growth on climate change ..................................................................................................... 75 9.1 The predictions of the model on climate change ............................................................................. 76 9.2 Conclusion .............................................................................................................................................. 77 Part III. The EU’s Transition towards 2030 .................................................................................. 79 10. The outcome of the NEMESIS model: Introduction................................................................................. 80 11. Europe as whole ................................................................................................................................................ 80 11.1 The first phase (2011-14): External balance the main driver for GDP ........................................ 81 11.2 The second phase (2014-18): The rebound in productivity ........................................................... 83 11.3 Third phase (2019-30): Losses in competitiveness .......................................................................... 83 11.4 The labour market ................................................................................................................................
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