This year’s World Economic Forum Annual Meeting comes at a time of good news for the world economy. As we said in this month’s Global Economic Prospects report, for the first time since the financial crisis, the World Bank is forecasting that the global economy will be operating at or near full capacity. We anticipate growth in advanced economies to moderate slightly, but growth in emerging markets and developing countries should strengthen to 4.5% this year.
Global growth is good news for the fight to end poverty and boost shared prosperity around the world. But there are a few things we’re seeing that keep me up at night.
First, aspirations are rising all over the world. Nearly everywhere I travel, I see people on smartphones - and thanks to the internet and social media, those people can see how everyone else lives. Our research suggests that as people access the internet, their reference income – the income to which they compare their own – begins to grow, leading to rising aspirations. And internet access is booming. At the end of 2015 in Africa, 226 million smartphones were connected to the internet. By 2020, that number will triple to three quarters of a billion. Some studies estimate that by 2025, 8 billion people worldwide will have access to the internet.
Rising aspirations are a good thing for the world. Aspirations, linked with opportunity, can breed dynamism and drive inclusive, sustainable economic growth. But I worry - and studies suggest - that if aspirations are met with frustration, it could lead countries down the path of fragility, conflict, extremism and migration.
Second, innovation is accelerating and technology is reshaping nearly every aspect of our lives. We see this in our development efforts: we are now using drones to map the Zanzibar Isles to create a digital national property register, and satellite imagery to map power outages for tens of thousands of villages in South Asia. New technologies are giving us more and better data, so we can see what works and scale our efforts around the world.
But technology is also changing the nature of work. We don’t know exactly what the future of work will look like, but we know that automation will replace scores of tasks, which will in turn eliminate many of the less-complex and low-skilled jobs. The remaining jobs, and new ones that will be created, will demand new and more sophisticated skills. Some studies estimate that as many as 65% of primary school children today will work in jobs or fields that don’t exist yet.
A report released last December by the McKinsey Global Institute found that roughly half of all jobs are at risk of being automated - and that’s just with the technologies we have today. As Rob Nail, one of the leading thinkers about technology, told me recently: “Today is the slowest day of innovation we will experience for the rest of our lifetimes.”
Third, while aspirations are rising and technology is changing the nature of work, we are facing a crisis in education. Our World Development Report this year found that more than 250 million children around the world cannot read or write, despite some schooling, and roughly 264 million children worldwide aren’t even enrolled in primary or secondary school.
Countries will not be able to compete in tomorrow’s economy unless they invest much more, and more effectively, in their people – especially in health and education, which build human capital. But the way we finance health and education is broken. Too often, heads of state and finance ministers are willing to invest in their people only through grants or concessional loans. Too many heads of state and finance ministers tell us, “First we’ll grow our economies, then we’ll invest in our people.” We need to change the system and create demand for far greater investment in people.
To help solve this crisis and to help countries prepare for an uncertain future, last autumn we launched the Human Capital Project, an accelerated effort to help countries invest in health and education. We’re working with some of the world’s leading health and education economists to shine a spotlight on how countries invest – and too often, don’t invest enough – in the health and education of young people in order to build the human capital stock of the next generation.
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Eventually, the Human Capital Project will include a ranking, which we hope will create much more demand for countries to invest in health and education. The project’s data and analysis will also help us advise countries on where to invest resources for the biggest impact in improving outcomes in health and education.
We’re already seeing some startling findings on education. Examining data from the largest globally comparable database of education quality, which covers more than 90% of the world’s population, we’re quantifying the extent to which the same number of years of schooling leads to massively different learning outcomes in different countries. As our economists put it: the data imply that a year of schooling is worth much more in some countries than in others.
With this new data and analysis, the Human Capital Project will help countries improve their education systems, and we’re doing similar work to improve investments in health.
If we don’t act now, not only will our goals of ending extreme poverty and boosting shared prosperity be out of reach; peace, stability, and prosperity for large parts of the world could also be threatened. If we invest the right resources in people, with the sense of urgency that this crisis requires, we can create equality of opportunity, harness the power of innovation, and come closer to making the global market system work for everyone.