Panel Debates Moves to Spur Growth, Create Jobs

Global economy stuck in low growth, high unemployment rut

Public infrastructure investment could lift growth

Reducing inequality, sparking job-rich growth are key priorities

In the current global environment of subpar growth, where unemployment is high and borrowing costs are low, infrastructure investment might be the key to spurring growth when little else has worked, participants suggested.

Infrastructure investment and other structural reforms—as well as the troublesome rise in inequality and youth unemployment—were key topics of debate at the day-long conference “The Challenges of Job-Rich and Inclusive Growth.” Held on the eve of the IMF-World Bank Annual Meetings, the conference brought together policymakers, academics, and representatives from think-tanks and international organizations to discuss how to ignite and sustain job-rich and inclusive growth.

“There is a very real risk that the world could get stuck for some time with a new ‘mediocre’ level of growth,” cautioned IMF Managing Director Christine Lagarde in opening remarks. “With the risk of mediocrity, we cannot afford complacency.”

Era of easy growth over

The jobs and growth challenge has several worrisome dimensions, Lagarde observed. The average unemployment rate in developed economies stands at 8.5 percent, she said, and among youth, 13 percent. Moreover, inequality has reached critical levels. “The world’s richest 85 individuals control as much wealth as the world’s poorest 3.5 billion people,” she noted, citing research by Oxfam.

These themes were taken up in the first session, “The Imperative of Robust and Sustained Growth,” moderated by Adam Posen of the Peterson Institute for International Economics.

“In a no-growth environment, as the distribution of income is going the wrong way, someone is getting hurt,” said panelist Michael Spence of New York University. “Whereas in a high growth environment, the distribution of income can go the wrong way but at least everybody’s [income] is still going up, just not at the same rate.”

The United States, he said, is growing well below its potential—in part because the government has underinvested in infrastructure, education, and technology.

Ernesto Zedillo of Yale University also blamed mediocre economic prospects on mediocre policies, and was of the view that there has been “enormous complacency” in a number of countries. “This era of things being relatively easy—to ride on the shoulders of China or to ride on the...