Three areas policy makers and business leaders can target to increase prosperity:
- Demand. In an era of near-zero interest rates, all leaders must go beyond their traditional role. Fiscal policy must explore new infrastructure– and social-financing models, monetary policy may need more unorthodox ideas in an era of negative interest rates, and microeconomic policy makers must continue to assess regulatory barriers to growth. Private-sector leaders can also adopt new mind-sets and strategies to find opportunities for productive investment.
- Productivity. Digitization could contribute more than $4 trillion by 2025, at a conservative estimate. Expansion of global flows could spur further growth: if all countries had matched the top quartile of connected countries over the past decade, global GDP today would be $10 trillion, or 13 percent higher. The Internet of Things could usher in the next wave of technology-driven productivity growth.
- Inclusion. To realize the benefits of broader-based economic growth and halt growing inequality, all leaders must help boost labor-market participation and smooth social costs that are a by-product of growth. For example, equalizing labor-market participation by women could add up to 26 percent to global GDP by 2025.
Universities need to be aware of these so that they can contribute to the action items needed by society.