Even as the World Bank calls for 600 million more jobs by 2020, the IMF forecasts a long economic slowdown. Will new technologies help? No. The first need is basic reform in governance.
Just to keep the rate of joblessness constant, the global economy will need to create 600 million jobs over the next eight years, according to a new World Bank report.
Where will all those jobs come from?
The “job engines” of the past two centuries were usually new technologies, such as the steam engine, electricity, new seed varieties, or new types of manufacturing. Growth was also driven by more trade, easier transport, instant communications, and better rule of law.
Now many economists wonder if global growth is in a long stall with no new “engine” in sight. The International Monetary Fund (IMF) warns of an “alarmingly high” risk of a sharp slowdown for both developing and developed nations in coming years. Much of Europe is in recession. Banks and governments in many countries are saddled with debt.
“Looking ahead, no significant improvement appears in the offing,” states the IMF’s latest World Economic Outlook. Many workers have simply left the labor force. More than 620 million young people have no job or aren’t being educated, the World Bank finds.
This pessimism has many economists looking for new models of growth. Harvard economist Dani Rodrik, for example, says poorer countries may not be able to rely on industrialization as a path to prosperity, as much of Asia has. Modern factories are highly advanced, requiring fewer workers and more skills. They can be easily moved. Growth, he wrote last month, will rely instead on “sustained improvements in human capital, institutions, and governance.”