Growth After the Storm? A Longer-Run Perspective

per Jacobson lecture, February 12, 2010

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The October 2009 Per Jacobsson Lecture, delivered in Istanbul in conjunction with the 2009 Annual Meetings of the IMF and World Bank, examined longer-run growth prospects for the global economy following the recent global economic crisis.
Central question posed: Will the world be able, in the five to ten years after the crisis abates, to return to the very rapid kind of economic growth sustained in the five years leading up to it?

Kemal Dervis, the 2009 Per Jacobsson lecturer, argues that recent debate has focused on demand-side factors while neglecting supply-side sources of growth.
Contrary to the majority view that limited, below-trend growth is likely to prevail for some time, there is probably potential for very rapid growth in the world economy over the coming decade, thanks to strong supply-side factors.
Realization of this supply-side potential depends on demand-side management both at the national level and through improved global macroeconomic policy coordination.

Supply-side strengths can support a return to rapid growth, but policy actions are required on the demand side.
National-level demand management and improved global macroeconomic policy coordination are highlighted as necessary conditions for realizing potential growth.

Subject: Balance of payments, Consumption, Current account deficits, Current account surpluses, Fiscal policy, Fiscal stimulus, National accounts, Potential output, Production
Keywords: administrator of the United Nations Development Programme, Consumption, Current account deficits, Current account surpluses, deputy prime minister, feature of World Bank, Fiscal stimulus, Global, IMF Annual Meetings, PJ, policy analysis, Potential output