Some Thoughts on Making Long-term Forecasts for the World Economy
Countries and international organizations working on longer-range development issues depend on long-term quantitative projections and scenario analysis. Such forecasting has become increasingly challenging, thanks to the rapid pace of globalization...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2013/11/18523267/some-thoughts-making-long-term-forecasts-world-economy http://hdl.handle.net/10986/16908 |
| Summary: | Countries and international
organizations working on longer-range development issues
depend on long-term quantitative projections and scenario
analysis. Such forecasting has become increasingly
challenging, thanks to the rapid pace of globalization,
technological progress, the interplay among them, and
enhanced connectivity among people. As a result, seemingly
isolated events can quickly lead to wide-ranging and lasting
regional or even global consequences. This paper examines
the problem of long-term economic forecasting in the face of
increased complexity and uncertainty. With the benefit of
hindsight, it scrutinizes past long-term qualitative and
quantitative projections for the 1990s in order to draw
lessons on how an institution can and should conduct
long-term forecasting and policy analysis. The main
conclusions are that policy makers and researchers across
the world urgently need to see the big picture if they are
to deal with the specific challenges and opportunities they
will face over the long term as economies and global
linkages undergo major structural changes under conditions
of considerable uncertainty and volatility. Global
institutions need to have strong research programs that work
in close collaboration with other international
organizations, academic centers, and independent experts on
important long-term development issues ("blue sky"
issues) and megatrends. These institutions need to build on
their comparative strengths and form teams of in-house
researchers and global experts who work on state-of-the-art
models related to globalization, technological progress and
innovations, climate change, demographic shifts, population,
and labor force quality and their policy implications at
both the global and country levels. Researchers should be
encouraged to consider how global challenges such as
financial crises, climate change, and infectious diseases
can lead to breaks in economic trends and regime change and
how such breaks affect economic activity. Alternative
scenarios need to be created that incorporate the views of
contrarian forecasters, including forecasts of possible shocks. |
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