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Around the world economy in 80 minutes

 

Last week, I had the opportunity to moderate a panel titled "The World Economy in the Next Ten Years," sponsored by the Chazen Institute at Columbia Business School. The discussion, a whirlwind tour of the world economic system, was great fun -- and provided useful economic evidence to back up Foreign Policy's own Nov. 30 event, which focused on the political "rise of the rest." The Chazen Institute has posted the videos of each speaker online, but let me give a quick rundown of what caught my attention as the most important and attention-grabbing points of the discussion.

FP contributor Arvind Panagariya reminded the audience that -- despite the debate over whether India or China will be Asia's preeminent economic giant - India is still an extremely poor country. It currently ranks in 165th place in the GDP per capita among countries worldwide, just above Mongolia and below countries such as Iraq and the Republic of Congo. But that's about to change rapidly: India could grow at a 10 percent clip over the next 15 years.  This rapid growth means that, by 2025, the combined size of the Chinese and Indian economies could equal the U.S. economy.

Shang-Jin Wei, the director of the Chazen Institute, argued that China's unique demography might hold the key to the country maintaining its torrid growth rates for the next decade. He pointed out that there are now 115 men in China for every 100 women, meaning that approximately one out of every nine Chinese men is unable to find a spouse (excluding the possibility of gay marriage or polygamy, presumably). He proposed that this competition for China's scarce supply of brides encouraged men to accumulating the wealth necessary to attract a mate. That's not just pop sociology: Wei cited data that showed workers in regions with skewed sex ratios were more likely to take dangerous or unpleasant jobs, and more likely to launch privately owned businesses.

But while the future is rosy in South and East Asia, it looks less bright in Europe. Charles Calomiris, a professor of financial institutions at Columbia University, predicted that the current economic crisis would cause "the end of the Eurozone as we know it." He painted a scenario where Europe's weak economies, starting with Greece, were unable to repair their dismal fiscal situation without abandoning the euro.

John Coatsworth, the dean of Columbia's School of International and Public Affairs (SIPA), discussed Latin America, which he suggested was essentially poised to split in two. The South American countries, which have successfully diversified their trading partners by establishing new relationships in Europe and Asia, would witness "the retreat of American leverage and capacity" to the levels that existed in the late 1800s. These countries, he argued, will enjoy rapid growth and exhibit growing independence from the United States on the international stage. Meanwhile, the countries of Central America and the Caribbean would be unable to break from their dependency on the United States -- and consequently experience slower growth rates as the U.S. economy limps along.

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Don't say "climate"; do say "innovation."

On Wednesday, a fascinating and eclectic group of scientists, journalists, policy makers, and entrepreneurs converged at the "Energy Innovation 2010" conference in Washington, sponsored by the Innovation Technology Foundation and the Breakthrough Institute. Speakers and moderators included the New York Times' Andy Revkin,  DOE Under Secretary of Energy Cathy Zoi, MIT's William Bonvillian, Tom Kerr of the International Energy Agency, NPR's Richard Harris, Time's Bryan Walsh, longtime staffers for Sens. Richard Lugar and Jeff Bingaman, and many others.

One thing that immediately struck me was the stark change in tone from recent past conferences: After two years of fairly disappointing outcomes at the U.N. climate summits in Copenhagen and Cancun, and after watching hopes for cap-and-trade or other measures to regulate carbon fizzle in the U.S. Congress, a growing slice of those favoring investment in clean-energy are working hard to ditch the association with "climate," which now seems to many a losing political issue. As the Breakthrough Institute's Ted Nordhaus put it, "We need to free energy from the polarizing climate debate."

Thus, the new framing is that energy innovation is about building a stronger America; it's about leading the next global innovation wave. It's not about creating in the short-term "green jobs"  (a term we don't hear so much anymore), but about recognizing that long-term economic prosperity will require greater investment in science and engineering education. (Tom Friedman was not present in person, but clearly in spirit.) And so, the ensuing conversations focused not on temperature targets or sea-level predictions, or even on the imperative of loosening America's dependence on Middle East oil, but largely on trying to sleuth out just what is innovation, where it comes from, and how to nurture it.

Over the last 100 years, America has had a pretty good track record at leading global innovation waves: developing and commercialzing the technologies for the combustion engine, aviation, the telephone, television, computer, and the Internet. How did that happen, and how can we make it happen again? The historic role of generous, sustained funding from the federal government, in particular the Department of Defense, in the early stages of developing the aforementioned technologies was several times mentioned. (Over at Time's Ecocentric blog, Bryan Walsh has posted a chart of government R & D investment over the last 50 years in various sectors, including basic energy research, which many argue is now too low.) The recent policy paper "Post-Partisan Power," co-published by theBreakthrough InstituteBrookings Institution, and American Enterprise Institute, is just one of myriad recent pleas for greater "federal innovation investment," which the authors now calculate at $4 billion and recommend bumping up to $25 billion. Needless to say, it's hard to argue against throwing more money at an important challenge, but also hard to imagine that money materializing in the next two years. But let's say it does. Where and how should we spend it?

One relevant upcoming report will be the International Atomic Energy's global study on green energy investments, which according to senior energy analyst Tom Kerr will look at both comparative national policies supporting basic and applied research and at policy tools to drive adoption  of new technologies. When it comes to questions of how to build up a massive solar-panel manufacturing base in five years, we're collectively in awe of China. But when it comes to figuring out how to get utilities and customers to actually adopt new technologies at home, Kerr suggested we might learn more from boring Old Europe.

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