## "Innovation, Technology and the 21

_IMF News, February 25, 2014_

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**Canonical URL:** ["Innovation, Technology and the 21](https://www.imf.org/en/news/articles/2015/09/28/04/53/sp022514)

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## Bibliographic details
- Authors: Christine Lagarde Managing Director
- Published: February 25, 2014

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### Global economic situation and policy context
- Global economic growth projected at "3¾ percent" this year, rising to "4 percent" next year.
- Emerging markets and developing economies accounted for "three-quarters of global economic growth in recent years" but are currently weakening as cycles turn and growth slows.
- Crisis legacy: "had the crisis not occurred, there might have been 62 million more jobs in the world today, according to the International Labor Organization."
- Current labor market scale: "over 200 million people looking for work across the globe"; "75 million of these are young people."
- G20 commitments:
  - Complete core financial reforms set out in response to the crisis by "the end of 2014" to make the financial sector safer.
  - Improve clear and consistent communication of policy actions and cooperation on monitoring spillovers.
  - Country-specific and collective reform efforts that, "if fully implemented, could raise the level of GDP by an extra 2 percent over the next 5 years."

### Technology and the economy — trends, productivity, and jobs
- Technological era defined by a "hyperconnected world" and the rise of "genuine machine intelligence" — using machines "for brains" and connecting those "brains."
- Observable innovations cited: smartphones more powerful than previous supercomputers; self-driving cars; 3-D printing of complex parts; advanced robots.
- Productivity puzzle:
  - Advanced machine technology effects are "not showing up in productivity statistics—at least not yet."
  - Alternative views noted: productivity gains may be "devilishly hard to measure" or may appear "in time."
- Employment risks:
  - Historical concern of "technological unemployment" when labor is economized faster than new uses are found.
  - Broad risk that rapid change can displace even seasoned professionals.
  - Policy imperative: "jobs must be a preeminent priority in the years ahead."

### Technology and rising inequality — evidence and drivers
- Global inequality indicators cited from Oxfam and IMF-related findings:
  - "Almost half the world’s wealth is owned by one percent of the population."
  - "The bottom half of the world’s population owns the same as the richest 85 people in the world."
  - "Since 1980, the richest 1 percent increased their share of income in 24 out of 26 countries for which we have data."
- United States specifics:
  - "The share of income taken home by the top 1 percent more than doubled since the 1980s, returning to where it was on the eve of the Great Depression."
  - "Since 2009, the richest 1 percent captured 95 percent of all income gains, while the bottom 90 percent got poorer."
- Labor’s share and skills:
  - "Labor’s share of income has fallen over the past two decades in 26 out of 30 advanced economies—even though labor productivity has risen."
  - "The unemployment rate for people without a high school diploma is three times greater than for those with a bachelor’s degree or higher."
  - "Over the past two decades, only those with college degrees have seen rising real wages."
- Consequences and policy levers:
  - Skewed income distribution "harms the pace and sustainability of growth over the longer term."
  - IMF work indicates carefully designed tax and spending policies can reduce inequality via improved access to health and education, targeted social programs, and more progressive taxation.
  - Political economy caveat: "Policies aimed at countering inequality are hard to design" and "throw up winners and losers."

### Education and the "new multilateralism" — solutions and institutional responses
- Education as the "bridge" to a desirable future:
  - Need to change "what people learn, how people learn, when people learn, and even why people learn."
  - Emphasis on skills where humans outperform machines: "cognitive skills, interpersonal skills, fine motor skills, or sophisticated coding skills," plus creativity, caring, craftsmanship, and lifelong learning.
  - Call for stronger public–private collaboration and for institutes of education to align strategically with changing technology and labor markets.
- The "new multilateralism":
  - Defined as a global approach where "all stakeholders take joint responsibility for the global common good" and where institutions adapt to a "more interconnected and networked" world.
  - IMF characterized as "an economic club of 188 member countries" that exemplifies multilateral cooperation in helping members in time of need.
  - The new multilateralism should incorporate diverse actors: "cities and multinational corporations" and "civil society organizations" empowered by technology.
  - Institutional imperative: bring existing multilateral institutions "fully up to date, and made fully representative of the changing dynamics of the global economy—including the shift toward dynamic emerging markets."

### Key policy recommendations and priorities
- Maintain accommodative monetary policy in many advanced economies where appropriate.
- Countries should "continue to bring their houses in order" by adopting credible policy frameworks and implementing structural reforms.
- Improve communication among policymakers to manage spillovers and market volatility.
- Prioritize job creation and policies that ensure growth is inclusive—assessing whether "the small boats rise with the big boats."
- Reform education systems to prioritize uniquely human skills and lifelong learning; encourage public–private partnerships and adaptive curricula.
- Modernize multilateral institutions and expand cooperation across a dense web of networks and coalitions to address global, trans-border challenges.

### Concluding perspective
- Technological change is not destiny: "technology is not destiny, we shape our destiny."
- The central test posed: can society shape technology to produce "solid, sustainable, and balanced" growth rather than "fragile, erratic, and unbalanced" outcomes?
- Final civic appeal to Stanford and similar institutions to help shape a future that enhances human creativity, innovation, and shared opportunity.

*Speech by Christine Lagarde, Managing Director, International Monetary Fund; Stanford University, February 25, 2014.*

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## References

- [Australia and the IMF](http://www.imf.org/external/country/AUS/index.htm)
- [Japan and the IMF](http://www.imf.org/external/country/JPN/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Webcast](https://www.imf.org/external/mmedia/view.aspx?vid=3298345143001)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp022514_