Policy Challenges for the Next 50 Years

Abstract

This paper identifies and analyses some key challenges that OECD and partner economies may face over the coming 50 years if underlying global trends relating to growth, trade, inequality and environmental pressures prevail. It highlights the growing need for international policy coordination and cooperation in a number of areas. For example, global growth is likely to slow and become increasingly dependent on the diffusion of knowledge and technology, while the economic costs of environmental damages will mount. The rising economic importance of knowledge will tend to raise returns to skills, likely leading to further increases in earning inequalities within countries. While increases in pre-tax earnings do not automatically transform into rising income inequality, the ability of governments to cushion this impact may be limited, as rising trade integration and consequent rising mobility of tax bases combined with substantial fiscal pressures may hamper such efforts. The paper discusses to what extent national structural policies and heightened international cooperation can address these and other interlinked challenges over the coming 50 years. JEL classification: F, H, I2, I3, J1, O3, O4, Q5 Keywords: Global economy, growth, technological change, inequality, income distribution, immigration, environmental damages, climate change, tertiary education, fiscal consolidation, structural reforms, interdependence, co-ordination, projections