Introduction

The world economy is undergoing an historic transformation, reflecting the rapid growth of developing countries and their integration into global markets. The crisis—the epicentre of which was in the USA and Europe—has, if anything, accelerated their rising share of global economic activity. The chapter provides a brief discussion of the long-term implications of the crisis. The baseline scenario states that markets stay open and macroeconomic policies remain sound; catastrophes—economic, natural, or geopolitical—are assumed not to occur. The main force propelling growth in developing countries is 'catch-up' of technology to that at the frontier as found in the USA and other advanced countries where total factor productivity is the highest in the world. Developing regions will see their workforces expand by close to 1.5 billion people, mostly in Africa and Asia, while the labour force in developed areas will shrink by more than 100 million workers.