The post-pandemic economy’s high inflationary pressures are being powered in part by secular trends and forces, many of which are operating on the supply side. While there are also transitory factors – such as supply-chain disruptions and bottlenecks, and China’s zero-COVID policy – these presumably will abate at some point. But the secular trends are likely to lead to a new equilibrium in many economies and global financial markets.



Environmental, social, and governance (ESG) considerations are playing an increasingly prominent role in business. ESG is now central to how firms in a wide range of sectors, including finance and asset management, define their purpose, mission, and strategy, and it is increasingly shaping hiring practices and regulatory activity. But whether the apparent embrace of ESG will deliver real progress remains to be seen.

The promise of ESG stems from an important proposition. The key challenges we face today – from achieving reasonable levels of equity and equality of opportunity to ensuring environmental sustainability – cannot be overcome by any single actor, not even the government. On the contrary, effective solutions will require all hands on deck, including business, government, finance, education, the courts, and the nonprofit sphere.



Central banks’ efforts to contain high and rising inflation are fueling growth headwinds and threatening to tip the global economy into recession. But the proximate cause of today’s inflationary pressures is a large, broad-based, and persistent imbalance between supply and demand. Higher interest rates will dampen demand, but supply-side measures must also play a large role in inflation-taming strategies.

Over the past year or so, the rollback of pandemic-containment policies has spurred a simultaneous surge in demand and contraction in supply. While this was to be expected, supply has proved surprisingly inelastic. In labor markets, for example, shortages have become the norm, leading to canceled flights, disrupted supply chains, restaurant closures, and challenges to health-care delivery.



Fast-growing companies and startups were once the preserve of Silicon Valley and Seattle. No longer. Today, the United States boasts several innovation hotspots, including Austin, Miami, New York City, and Washington, DC. In recent years, similar hubs have also emerged in Europe, including Amsterdam, Berlin, Helsinki, London, Paris, and Stockholm. But this phenomenon is no longer limited to the advanced economies of the West. In fact, startup culture has gone global.



In 1979, W. Arthur Lewis received the Nobel Prize in economics for his analysis of growth dynamics in developing countries. Deservedly so: His conceptual framework has proved invaluable in understanding and guiding structural change across a range of emerging economies.

The basic idea that Lewis emphasized is that developing countries initially grow by expanding their export sectors, which absorb the surplus labor in traditional sectors like agriculture. As incomes and purchasing power rise, domestic sectors expand along with the tradable sectors. Productivity and incomes in the largely urban, labor-intensive manufacturing sectors tend to be 3-4 times higher than in the traditional sectors, so average incomes rise as more people go to work in the expanding export sector. But, as Lewis noted, this also means that wage growth in the export sector will remain depressed as long as there is surplus labor elsewhere.



Over the past five years, India has experienced an unusually rapid expansion of digital connectivity and access to services. This has had a positive impact on the inclusiveness of economic growth; on efficiency and productivity in retail, supply chains, and finance; and on entrepreneurial activity.

India’s engagement with digital technology dates to the late 1980s. Major investments in computer science and education were made under Prime Minister Rajiv Gandhi’s administration (1984-89). And with the expansion of internet access in the 1990s, India became home to many major outsourcing companies in IT administration, business processes, and customer service. But because the infrastructure needed for widespread mobile-internet access remained deficient, penetration lagged and data costs for mobile users ended up being among the highest in the world.



The accelerating rollout of COVID-19 vaccines in many advanced economies has set the stage for rapid recovery in the second half of this year and into 2022. Although growth in digital and digitally enabled sectors will level out somewhat, high-employment service industries will ride a wave of pent-up demand.



MILAN – The global economy is undergoing very large structural shifts, driven by three megatrends. One is the digital transformation of the foundations on which economies are built and run. Another is the growing purchasing power and economic strength of emerging economies, and China in particular. Lastly, there are broad-based political-economy trends, which include rising nationalism, various forms of populism, political and social polarization, and a possible breakdown of the multilateral framework within which the global economy has functioned since World War II.



The recent revelation that more than 50 million Facebook profiles were harvested by app and given to political consultancy Cambridge Analytica has produced a backlash against the platform. But it is just the latest example of the risks associated with the Internet, which forms the core of today’s digital revolution.



Most of the global economy is now subject to positive economic trends: unemployment is falling, output gaps are closing, growth is picking up, and, for reasons that are not yet clear, inflation remains below the major central banks’ targets. On the other hand, productivity growth remains weak, income inequality is increasing, and less educated workers are struggling to find attractive employment opportunities.



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