We are living in exceptional times. Global GDP per capita
has almost tripled in the past 50 years. Thanks to this
remarkable growth, hundreds of millions of people have escaped
poverty and joined the global middle class.
However, growing welfare brings unparalleled challenges. To
ensure growth, mankind is using up an unprecedented amount of
natural resources. Growth has a huge 'price tag', not only with
respect to the natural environment but also in finance. Global
debt is rising steadily. Meanwhile, our societies are
experiencing momentous changes. The demographic boom is
creating overpopulated and younger areas, as well as
depopulated and ageing ones. Inequalities have reached
dangerous levels, causing considerable social tension.
At the same time, the world has irreversibly entered the
most tumultuous technological revolution in its history. The
consequences are unpredictable. The concept of sustainable
development has to be redefined once and for all. Sustainable
growth can no longer simply be described by GDP. The impact of
our economies on the natural environment, social cohesion and
access to funding needs to be addressed comprehensively.
The challenges of the 21st century can be classified into
three broad categories: technology, money and geopolitics.
Digitalisation is already part of our everyday lives. The
spread of robots and AI will transform the economic order and
data will become the most important raw material. Over time,
machines may expand not only our physical capabilities but also
our mental capacities, which may open up extraordinary
perspectives for development on the one hand, but may further
erode social stability on the other.
The transformation of finance has been accompanied by
previously unimaginable phenomena. Inflation has practically
disappeared from the developed world. Negative real interest
rates have become commonplace, while nominal yields have a
negative sign. Central bank measures previously considered
unorthodox are becoming part of traditional instruments.
Fintech firms are challenging banks not only in specific market
segments but in their main businesses. More and more market
players are actively looking for the currency of the digital
age. The new solutions may fundamentally change our idea of
money. It is vital that this process be governed by the state,
and especially central banks, which efficiently represent
long-term public interests, rather than giving free rein to
short-term private interests.
The geopolitical environment is also being radically
altered. The world's economic focal point is shifting
eastwards. In this respect, the increasing importance of the
closer economic relationship between Europe and Asia can be
crucial. Urbanisation may gain even further momentum, with
megacities vying to become the backbone of the global economy.
Globalisation is also being transformed: achieving an efficient
flow of raw materials, goods and capital, were the key goals,
but, skilled labour has increasingly become the focus of fierce
competition worldwide. At the same time, the fight for
widespread access to and use of data is just around the
In the light of the above, it is not an exaggeration that we
are on the brink of a new age. The search for the right
solutions calls for highly open minds and the shattering of
taboos. Old textbooks cannot provide answers to the exceptional
challenges of the 21st century. Our duty as economists is to
make the transition to the new age as smooth as possible and to
ensure that challenges are turned from obstacles into