CGD NOTE 368 | - Two Futures for Global Development - 1. A world off course

Education rates in the wealthiest countries plateaued, and an older and shrinking cohort of scientists and engineers in countries home to most of the world’s research potential had to engage in ever larger collaborative efforts to reach the frontier of knowledge, with the associated bureaucracy and transactions costs. [...] In the name of industrial policy and national security, the EU and the US led the way in tearing down the authority and influence of the World Trade Organization, raising tariffs on goods from steel through cars to solar panels and subsidizing inefficient domestic industry that then struggled to find workers. [...] China did finally enter the ranks of the world’s high-income countries in the late 2030s, but the proportion of the world’s population living in low and lower middle-income countries remained almost unchanged-at about half of the population of the planet. [...] But the global number of manufacturing jobs continued to decline nonetheless, and the widest path to rapid growth permanently switched from investment in the physical capital of manufacturing to the human capital required for migration and services exports. [...] Alongside allowing considerably more generous support to the poorest countries including in the Sahel, this allowed for a combination of raising the IDA threshold and diverting some resources to the subsidy of global public goods and payments to end poverty.