A global growth bargain: the West's only hope.

• Author: Brown, Gordon

U.S. President Barack Obama caught the imagination of the world when he talked recently of a new "Sputnik moment." He outlined a bold plan for improving education, infrastructure, and technology, and vividly compared the resolve required to put a man on the moon to the determination needed to restore growth to the U.S. economy.

Obama is right to say that the West faces not only great challenges, but also great opportunities. In the last decade, the global economy was transformed by one billion Asian workers entering the ranks of industrial producers. In 2011, for the first time in two centuries, Europe and America face being out-produced, out-exported, and out-invested by China and the rest of the world.

Yet Asia's growth also gives the West unprecedented economic hope. In this decade, the world will be transformed yet again by the rise of the Asian consumer. By 2020, Asia's domestic markets will be twice the size of America's. The world's middle class will have swelled from one billion consumers to three billion.

The opportunities for growth in Europe and the United States from this additional global demand are enormous. The countries and companies that will flourish in Asia's new markets will be those that can provide the technology-driven, custom-built, high-value-added goods and services needed to serve Asia's two billion consumers.

But neither Europe nor the United States is in a strong enough position to take best advantage of these new markets. The West must again begin to out-invent, out-innovate, and out-skill the rest of the world if it is to seize the opportunities that Asia presents. Indeed, unless the West significantly expands its capital investment in engineering, science, and new technologies, it will be marginalized by countries whose governments back their innovators with hard cash.

Obama's investment plan could be the foundation stone for a formal global agreement that delivers higher levels of growth to all corners of the world and creates millions of new jobs. Under such an agreement, Europe would join the United States in raising levels of investment--complementing America's "moonshot" initiative with a program of structural reform aimed at building a digital, green, energy-efficient, and competitive economy--while China would play its part by increasing its consumption. I believe that such an agreement could boost the world economy by around 3 percent by 2014--and lift one hundred million people out of poverty.

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