How can we transform the economic growth we have into the growth we want?

Global economic growth has a problem. In fact, it has several.

Not only has a sustained slowdown left growth lower than it was before the 2008 global financial crisis, growth over the past centuries has led to some undesirable consequences. Economic growth has been uneven, between regions and countries, and within countries themselves, leading to significant inequalities and persistent pockets of poverty. At the same time, the growth we have is environmentally destructive and has brought us to the verge of a critical tipping point for the climate.

Today, the global growth landscape faces new contours characterized by economic shocks, geopolitical tensions, urgency of the green transition, technological change and the need for a new social contract. Tied in with slowing productivity growth, these factors are making it harder to accelerate economic growth. This is why the world needs to shift gears – to get out of the slow growth lane it has been stuck in for years and move into a faster lane that can offer not just the quantity of growth it wants, but also the quality of growth it needs.

The Forum’s Global Future Council on the Future of Growth has spent the past two years working to find ways to create this better balance between quality and quantity. To achieve it, growth will have to be built on four key foundations – it will have to be innovative, inclusive, sustainable and resilient.

These are the ways we believe we can get there:

Economic growth remains imperative. Without it, we can't respond to the needs of much of the world or to the challenges of the 21st century. The number of people living below the poverty line will remain stuck at around 1990 levels, and the $100 trillion to $300 trillion needed to fund the green transition will not materialize.

Yet the need to accelerate the green transition and to make progress on poverty is exactly why our past patterns of economic growth need to change. For too long, the model of growth we have followed has fuelled environmental damage and exacerbated inequalities, making it environmentally, politically and socially unsustainable.

We need a new era of growth that is innovative, inclusive, sustainable and resilient. The deadline to move to better quality growth is now. The question is not when, but how.

With the world on track to breach one of the key goals of the Paris agreement for the first time in 2024 – that of keeping temperature rises to less than 1.5°C above pre-industrial levels – the urgency of climate action is clearer than ever.

The rapid expansion of the energy transition is helping to disentangle GDP growth from carbon emissions. Studies show that around 50 countries have managed to decouple emissions from economic growth. However, that is barely a quarter of the total, and most of those who have cut the cord are higher-income countries. Moreover, true environmental decoupling would need to address a wider range of ecological pressures in addition to carbon emissions. There is much that remains to be done.

The way forward involves not only replicating the success of those 50 countries that have already broken the link between economic expansion and emissions, but will require these successful countries to help share technology, bolster financing and spearhead the scale-up of solutions.

At the same time, advanced and emerging economies need to enhance their collaboration on emissions abatement immediately. This can create global cooperation and a new era of good, green growth – one that unlocks innovation, investment, employment and environmental benefits.

Many low-income and vulnerable countries, particularly in Africa, are stuck in a decade of economic stagnation. Debilitating debt burdens and limited access to finance are pushing these developing nations further behind developed ones.

This is not compatible with the need for economic growth to be innovative, inclusive, sustainable and resilient. Africa’s soaring population – which the UN projects will make up more than quarter of the global total by 2050, and include a majority of the world’s children – means the continent has vast potential and will have a disproportionate impact on the global growth story. Yet it is also where the greatest fragility and uncertainty lies.

Building new green and digital skills will improve economies, lift living standards and foster innovation that will benefit everyone. But unlocking this new era of growth will require a radical reimagination of policy instruments as well as new sources of financing.

There also needs to be targeted and context-specific analysis to identify and better understand the factors currently hindering growth, such as lack of adequate social safety nets, high debt burdens, inadequate infrastructure and political instability. This is key to unlock economic growth that is shared more extensively and more equally around the world.

AI holds the power to transform productivity and reshape economies, but its potential impact remains uncertain and far from guaranteed.

The opportunities and risks around AI are huge, and most of them sit with advanced economies. Many jobs could be put in jeopardy by this rapidly evolving technology, but at the same time potential productivity gains and the arrival of new roles working in AI promise significant benefits.

AI may not have the same effect in the developing world because technology is less widespread and the incentive to automate work in these nations is limited, given the lower wages. This means AI could widen the gap between rich and poor countries, the IMF says. A far better governance framework is needed to manage this and to ensure the benefits AI brings are spread as broadly as possible.

At the same time, a total of 2.9 billion people worldwide still do not have access to the internet, and around 96% of them live in developing countries. This digital connectivity gap is not just gaping, but is widening, according to the UN, which says this threatens impede progress on the Sustainable Development Goals.

The IMF estimates that $418 billion is needed to achieve universal broadband coverage. Without mobilizing this money to develop digital infrastructure where it is needed most, AI risks exacerbating existing inequalities.

A comprehensive policy approach is needed to harness the full benefits of AI and broaden the gains for all. Strategic investment in accelerating global AI diffusion and adoption will be key. Learn more about actionable steps for policy-makers here.

To get on board with green growth, countries need two things – the ability to afford it and the ability to access it. Emerging and developing economies are spending just a seventh of what they need to on clean energy if the world is to get on track to hit net zero by 2050, the IEA says.

Finding ways to get the $150 billion these countries spent in 2020 up to more than $1 trillion a year will require much improved access to financing. Blended finance – that mixes public and private money – needs to be explored more to cut costs and reduce risks for investors.

Other innovative financing models are needed too, such as sustainability-linked loans and bonds that offer lower interest rates if countries make progress on green goals. Development finance institutions have to play a key role here in helping move money and correct market failures.

Trade and technology sharing will also be pivotal. For the lowest-income nations, making these things happen will depend on international cooperation, as UNCTAD has pointed out. Its recommendations include creating more flexible rules for developing countries when it comes to international trade and intellectual property to help nurture the growth of green technology sectors.

With emerging markets expected to account for 88% of the growth in global electricity demand between 2019 and 2040, making this growth green is the only way to ensure the success of global climate action.

The job market is changing rapidly. Many of the roles of the future will require skills that have gone from niche 25 years ago to mainstream today. These skills are green and they are digital, and children need to begin learning them at school to prepare themselves for the job market.

Governments have to get the 250 million children that were out of school in 2023 back into education to ensure that everyone has a chance to gain these skills of the future. They also need to invest more in human capital at all ages, and to incentivize companies to invest in reskilling initiatives.

As work changes, workforces must change too. Education is not the only thing that has to be prioritized to develop a robust talent pool and future-ready workforce.

Falling fertility rates and ageing populations mean there will be a need to bring more women, disadvantaged communities and unemployed people into work, and to ensure young people are skilled up as soon as they leave education. Enhancing inclusion will bring a greater diversity of skills into the workforce, driving up productivity.

There’s also a need to recognize the integral role of the care economy in driving growth. Unpaid care work – much of which is carried out by women – would represent 9% of global GDP if it came with a salary, yet the social and economic value of the care economy remains mostly invisible.

Populations are ageing in advanced economies. Japan is the most striking example of this, with almost a third of the population aged over 65 and labour shortages already emerging. As well as eroding the national tax base, this also increases the need for tax revenue to fund pensions, healthcare and social care costs.

At the same time, emerging economies are seeing population explosions. If young people in these countries migrate to rich countries, it may appear to be a win-win, but policymakers in Western countries must prepare to manage the social and political consequences of immigration, alongside the threat of automation eroding jobs in the service sector, which the International Labour Organization says employs around two-third of migrant workers.

The resulting shifts in labour market dynamics will need to be managed carefully and pre-emptively, both in terms of the education demands of the incoming workforce and the welfare needs of those potentially displaced or entering retirement. Doing this well will empower people and pave the pathway for driving the growth we want.

Up to 7% of the world’s GDP is at risk if the world fragments into rival economic blocs, according to the IMF. Not only that, but increased hostility will impact progress on shared, global problems such as climate change, poverty and debt resolution.

Recent political developments heighten the risk of geoeconomic fragmentation, making it imperative to push back.

Finding ways to cooperate in a multi-polar world will be key to creating good economic growth, especially in an age when any disparities in the development of AI or decarbonization efforts could drive further divergence.

Coordinated and consistent efforts to cultivate cooperation in areas such as trade, technology, foreign investment and green energy are imperative to drive global economic convergence.

The eight points above form some of the key foundations for creating a kind of economic growth that will offer a better balance between quality and quantity, but the way that each country will go about building on these foundations will be different.

There is no one-size-fits-all approach, yet they will all have to have one thing in common to succeed – no country can build a resilient structure on those eight blocks without establishing popular support for the trade-offs that these new growth strategies will inevitably entail.

To do this, governments will need to take action to turn around plummeting levels of trust in public institutions.

One way to do so is by giving citizens a clear voice in the policymaking process – the OECD describes this as “a key driver of trust”, adding that “69% of those who feel they have a say in government actions trust national government, while only 22% do among those who feel they do not have a say”.

This approach can help ensure that the benefits of the innovative, inclusive, sustainable and resilient growth we want to achieve are broad-based. The alternative is rising inequality of income and opportunity, which will risk entrenching headwinds to inclusion. Reducing inequality will have the opposite effect.

Global economic growth may have had several problems so far this century, but with not even a quarter of the 2000s behind us, we have a unique opportunity to transform it into a century of solutions.

The Global Future Council on the Future of Growth convenes senior economists and thought leaders from across academia, business, government and civil society to provide intellectual guidance on new approaches to growth.

The council members are: Masood Ahmed (Co-Chair), Center for Global Development; Laura Alfaro (Co-Chair), Harvard Business School; Esfandyar Batmanghelidj, Bourse & Bazaar Foundation; Roselyne Chambrier, Onze Capital; Era Dabla-Norris, International Monetary Fund (IMF); Gala Díaz Langou, CIPPEC (Centre for the Implementation of Public Policies for Equity and Growth); Paul Donovan, UBS Global Wealth Management; Carl-Benedikt Frey, Oxford Martin School, University of Oxford; George Gray Molina, United Nations Development Programme (UNDP); Ravi Gurumurthy, Nesta; Karen Harris, Bain & Company; Rob Hornby, AlixPartners; Jin Keyu, London School of Economics and Political Science; Kumi Kitamori, Organisation for Economic Co-operation and Development (OECD); Mohammad Ali Rashed Lootah, Dubai Chambers; Chisom Okechukwu, Bill & Melinda Gates Foundation; Arunma Oteh, Saïd Business School, University of Oxford; Jan-Willem Scheijgrond, Royal Philips; Stefanie Stantcheva, Harvard University; Kellee Tsai, College of Social Sciences and Humanities, Northeastern University; Laura D'Andrea Tyson, Haas School of Business, University of California, Berkeley.

Council Manager: Sriharsha Masabathula, World Economic Forum.