The Long View: Scenarios for the World Economy to 2060
This paper presents long-run economic projections for 46 countries, extending the short-run projections of the spring 2018 OECD Economic Outlook. It first sets out a baseline scenario under the assumption that countries do not carry out institutional and policy reforms. This scenario is then used as a reference point to illustrate the potential impact of structural reforms in alternative scenarios, including better governance and educational attainment in the large emerging-market economies and competition-friendly product market and labor market reforms in OECD economies. Flexibility-enhancing labor market reforms not only boost living standards but, by raising the employment rate, also help alleviate fiscal pressures associated with population ageing. Another scenario illustrates the potential positive impact of linking the pensionable age to life expectancy on the participation rate of older workers, and in particular that of women. Additional scenarios illustrate the potential economic gains from raising public investment and spending more on research and development. A final ‘negative’ scenario shows how slipping back on trade liberalization – returning to 1990 average tariff rates – might depress standards of living everywhere.