Navigating the future of growth: a new tool for a new era

Contributors: Jesse Caemmerer, Roberto Crotti, Philipp Grosskurth, Kateryna Karunska, Sriharsha Masabathula (Centre for the New Economy and Society, World Economic Forum).

In a world grappling with the far-reaching effects of the COVID-19 pandemic, economic uncertainties, geopolitical tensions, a looming climate crisis and fractures in social contracts, global growth finds itself at a historic three-decade low. The pressing need to reignite growth is evident, but a narrow focus on short-term gains risks perpetuating ongoing environmental degradation, widening inequalities and fragile resilience.

A paradigm shift is needed: The key question is not whether economic growth is still necessary, but rather how we can move from growth at all costs to growth that is innovative, inclusive, sustainable and resilient.

To help countries navigate such a complex reality, the World Economic Forum is introducing the Future of Growth Report, a data-driven tool aimed at quantitatively assessing how countries’ growth stacks up in terms of sustainability, inclusiveness, innovativeness and resilience.

Unsurprisingly, data from the framework reveals a global landscape where growth is often unsustainable, non-inclusive and lacking in resilience. In several cases, growth is driven by resource exploitation, rather than fostering innovation and knowledge.

On average, on a 0-100 scale, the world is only halfway through most of the four dimensions measured by the framework. However, these global results mask critical differences in underlying trends and pathways.

In terms of innovativeness (45.2/100), the framework exposes a stark gap in the ability of economies to adapt and evolve their growth models in response to technological, social and institutional advancements. While innovation and digitalization trends project diverging avenues for advanced and developing economies, talent availability constraints increasingly favour developing countries.

Regarding inclusiveness (55.9/100), most economies fall short in ensuring that the benefits and opportunities of growth are shared among all stakeholders. Income and wealth inequalities are on the rise globally, with developing countries facing additional challenges related to insufficient access to basic services and deficient social protection systems.

Sustainability (46.8/100) is a critical concern, as most economies struggle to keep the ecological footprint of their growth trajectory within environmental boundaries. Despite the recent surge in green finance, capital allocations are still insufficient for delivering systemic change, and technological constraints limit a transition to economies run 100% on renewable energy. In addition to common transition challenges, countries at different income levels encounter different problems. High-income economies remain significant emitters but lead in environmental technology development. Lower-income economies, while emitting less, face the challenge of delivering economic growth by leapfrogging directly to newer and cleaner technologies.

Resilience (52.8/100) is an area where countries’ growth pathways’ capacity to weather and rebound from shocks varies significantly. Since COVID-19, many countries have started to emphasize more inward-looking policies. This can become a double-edged sword. On the one hand, some more localized efforts are needed, such as those strengthening local financial architecture or engaging in proactive investments for skills and demographic change. On the other hand, relying on well-diversified international networks promises to build more resilient national and global systems. For instance, countries’ supply chains are made more resilient by expanding and diversifying their supplier base, rather than attempting to become more self-reliant. At the same time, no country can be fully resilient on its own on issues such as climate change or global corporate taxation. On these and other aspects, global cooperation is the only way through which both global and national resilience may be bolstered.

Based on these findings, the World Economic Forum calls on nations to re-evaluate their growth strategies, fostering a future that is more sustainable, inclusive and resilient. Achieving this requires country-specific policies that match distinctive priorities and growth trajectories, and at the same time collective efforts, meaningful discussions and actions on the global stage, paving the way for a more prosperous and sustainable tomorrow.