The worldwide economy will fill more slowly in the 21st century than financial experts have expected, a finding that has suggestions for our capacity to adjust to environmental change in the next few decades, as per a new examination.
According to a new study predicting the economic futures of four income groups over the next century, developing nations will take longer to close the wealth gap and reach the income of wealthier nations. According to a new study that was recently published in Communications Earth & Environment, what economists have considered to be the worst-case scenario for global economic growth may actually be the best-case scenario.
According to the authors of the study, the findings suggest that governments should begin planning for slower growth and that wealthy nations may need to assist lower-income nations in financing climate change adaptations in the upcoming decades.
“We may require a considerable increase in funding for [climate] adaptation in developing nations, and we may also be overestimating our capacity to do so in the future within the existing fiscal framework.”
Matt Burgess, a CIRES fellow, director of the Center for Social and Environmental Futures.
Matt Burgess, a CIRES fellow, director of the Center for Social and Environmental Futures, and assistant professor of environmental studies at CU Boulder, who led the new study, stated, “We’re at a point where we might need to significantly increase financing for [climate] adaptation in developing countries, and we’re also at a point where we might be overestimating our future ability to provide that financing under the current fiscal paradigm.”
Ryan Langendorf, a postdoctoral fellow at CU Boulder and co-author of the new study, stated, “We can now start to winnow down the range of possibilities and move forward in more tangible ways.”
Burgess and his colleagues used two economic models in the new study to predict how much the global economy will grow over the next century and how quickly developing nations will reach wealthier nations’ income levels.
According to both models, the global economy will continue to expand, but at a slower rate than most economists anticipated and with a wider income gap between richer and poorer nations. As a result, debt-ceiling crises like the one that the United States of America endured this spring may become more common, and richer nations may be required to assist in financing climate adaptations for poorer nations.
“All things being equal,” Burgess stated, “slower growth than we think means higher deficits than we expect.” As a result, debt is likely to become more contentious and significant over time, resulting in disputes over debt ceilings.”
According to the researchers, wealthy nations should focus on getting their own financial houses in order in order to be able to support lower-income nations in financing climate adaptations. This is analogous to the situation in a flight emergency, in which individuals should put on their own oxygen masks first.
Burgess stated, “We’re talking about a world that is richer than today and more equal across countries than today.” Despite the fact that “we’re talking about relatively less growth and relatively more inequality,”
However, Ashley Dancer, a graduate student at CU Boulder and co-author of the study, believes that the new scenario may make it impossible for many wealthy nations to grow out of debt.
“The following inquiry is: what are a few different ways that we ought to be or could be helping [lower-pay countries] adjust, in the event that the assumption is that they won’t meet the degree of abundance that could permit them to do that rapidly and forcefully?” The dancer said.
More information: Matthew G. Burgess et al, Multidecadal dynamics project slow 21st-century economic growth and income convergence, Communications Earth & Environment (2023). DOI: 10.1038/s43247-023-00874-7
