|Expert sees bright future for world economy - Harvard professor paints optimistic picture - The Daily Star
|Impression of doom and gloom conceals facts of high per capita income growth, decrease in global poverty and era of relative peace-
Richard Cooper, a professor of international economics at Harvard University, held a lecture Tuesday on the prospects for the world economy until the year 2015.
The lecture took place at the American University of Beirut and was organized by the Institute of Financial Economics and AUB's Department of Economics.
According to Cooper, the daily reports from the world media give a certain impression that the world goes endlessly from one crisis to another. However, the professor said he believes that as a whole "we are doing fantastically well," referring to economic indicators such as world poverty and growth of income per capita over multiple periods of time.
Cooper insisted that from 1950 until 1998 the world had witnessed the largest growth in per capita income in its modern history, increasing 2.1 percent.
"From 1870 till 1913, there was a 1.3 percent increase and between 1913 and 1939, there was an increase of 1 percent," said Cooper.
He added that global poverty has decreased from 35 percent in 1980 to 12 percent in 1999. Such a statement brought multiple questions from the large audience attending the lecture, who generally insisted that the poverty gap had increased rather than decreased.
Cooper responded by saying that the poverty gap had increased, but that the median population had progressed at a fast rate, while the poorer population remains at a standstill.
According to Cooper, this explains the increase of the "poverty gap," but at the same time supports his theory that poverty has decreased, raising living standards to a more acceptable level.
Cooper said the last half-century was economically exceptional for three reasons. He explained that this period was extremely peaceful - with the exception of some conflicts - compared to the first half of the century, when two world wars took place.
"There have not been such quiet moments since the Roman Empire era," said Cooper. He added that better overall economic management policies, attributed to the theoretical and policy revolution led by economist John Maynard Keynes, have changed the economic rules from competitive economies to cooperative ones.
The last factor was the widespread creation of international economic organizations, such as the World Trade Organization and the International Monetary Fund, which helped in making economies much more efficient and mutually cooperative, he said.
"The institutionalization of technical change has been one of the most important aspects for growth as well. We have been paying researchers huge wages, or rewarding them through Nobel Prizes, to find better ways to produce and to do business," said Cooper. Such practices have actually existed since the 18th century but have recently boomed, he said, adding that this explains the recent rapid growth of the world economy.
"It is difficult to foresee the future without some pleasant and unpleasant surprises. But, surprisingly, we know with certainty that some of you will be 13 years older in 2015 and the rest will be dead," said Cooper jokingly.
"I also know that Saddam Hussein might be dead in 2015," he added.
In 2015, Cooper expects the world income to grow by 75 percent, compared to now, since the population crash in rich and developed nations will allow developing nations to lead the way in closing the poverty gap and make the world a much richer one. This will force a higher demand for better food, more energy and minerals.
"The world will succeed in meeting the expected high demand of 2015. The only resource which might cause a problem would be water supplies," he said.
Cooper added that this problem will not be a global one but, rather, regional. But "the world will be able to cope with it by finding adequate solutions," he said.
The implications of these economic changes, according to Cooper, is that there will be further globalization with more interaction between regions.
Tarek El Zein
The Daily Star