Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
WP7 – Well Being and Living Conditions
Well being global scenarios
ISMERI EUROPA
Challanges for Europe
in the world in 2030
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• finalising the third deliverable (global scenarios and preparation of European variants)
• Defining the fourth deliverable:• quantitative analysis on European well-being
(WB) with some econometric exercises linked to the CAM model
• reflection on “social Europe”
WHERE WE ARE
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
Dimensions of Well-beingDIMENSIONS CROSS-CUTTING ISSUES
Health
Governance
Income inequality
Community – Social Capital
Education
Social Inclusion, Employment
Material Standards of living
Security
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
Economic mechanisms– Two main factors: the per capita GDP level and the personal
income distribution– Public expenditure is also relevant and partially interrelated to
these two basic factorsSocial mechanisms
– dominated by demographic trends and labor market inclusiveness
Institutional mechanisms– legal and organizational infrastructures devoted to WB. Good
political choices and social networks influence the capacity to generate an environment favorable for WB
TRANSMISSION MECHANISMS
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
Sensitivity to drivers & mechanisms
Mechanism Main driversSensitivity in relation to the current
level of GDP per capitaLow Middle High
Economic
GDP per capita
+++ +++ ++Income distributionPublic expenditureFacilities/infrastructuresAccess to new technology
Social
Demographic trends
++ +++ +++Labor market inclusivenessJob quality SecurityAccess to WB facilities
Institutional
Governance quality
+++ ++ +DemocracySocial capital endowmentInstitutionalization of WB
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• How to adjust WB to the demographic changes?• How to sustain WB when financial and economic
interdependence reduce space to the state and the redistributive national policies?
• Trade-off between globalization and WB objectives:• reduce financialization and globalization of individual
economies?• move social policy in the global arena? • or both?
MAIN QUESTIONS FOR THE FUTURE YEARS
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
2022
2025
2028
60
80
100
120
EVOLUTION OF GLOBAL POPULA-TION AND GLOBAL WEIGHTED
POPULATION(2010=100)
PopulationWeighted population
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
2022
2025
2028
80
90
100
110
EVOLUTION OF POPULATION AND WEIGHTED POPULATION IN EUROPE
(2010=100)
PopulationWeighted population
• The demand for WB increases with the population (+20% in 2030)
• …but in some blocs demand increases more due to changes in the composition of the population
(2 =child, 1=working age, 3=old)
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• Increasing disparities among blocs in trends of WB demand, East Asia HI, Europe and USA at the top in 2030
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
130
135
140
145
150
155
160
165
170
175
180
DEMAND FOR WELL-BEING SERVICES (% of weighted population on total population)
Weights: 2 child, 1 working age 3 old JapanEast Asia High IncomeWest EuropeSouth EuropeUKNorth EuropeUSAOther DevelopedEast EuropeCISCentral AmericaChinaSouth AmericaOther AfricaOther East AsiaNorth AfricaIndiaOther South AsiaWest Asia
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• Increased urbanisation and the demand for public services and WB
America
North America
Europe
European neighbours
East Asia
World
Africa
Other Asia
0 10 20 30 40 50 60 70 80 90 100
URBAN POPULATION(% on total population)
2030 2010 1980
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• Public resources in % of income slowly converge, but distances remain important
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
Resources per capita have diverged during the past 30 years
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
Defined as “subsequent bedding”, they are:1. Reduced government2. China and US intervention3. Regionalisation (3 main groups:
American, European, Asian)4. Multipolar collaboration:
THE FOUR SCENARIOS
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
REDUCED GOVERNMENT: ASSUMPTIONSEconomic Social Institutional
• Slow growth in high income countries,
• Catching up of other regions (South America, India, Africa)
• Cut in public expenditure and WB services
• Increasing inequality in income distribution
• Slight decline in migration flows
• In advanced countries persisting unemployment and polarization of employment (especially in UK and Southern Europe)
• Increasing delocalization of firms in less developed countries
• Increasing social exclusion and related security problems
• Slower urbanization
• Reduced role of the State in redistribution
• Priority assigned to recovery of financial markets, poor attention to WB development
• Less social cohesion and solidarity in policy making
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• Continuation of the current trends and slower development in high income countries: the existing gap in WB between low and middle income countries and developed countries is reduced
• Africa still lagging behind in all the dimensions of WB• HIC - Deterioration of WB (quality of life and inequality). National states
weaker, welfare reorganized on a private basis and in a fragmented way• MIC - Social transformation (demography, family, growth of a middle
class) and the role of the State in the substitution of informal welfare is inhibited, with complex and instable social and political effects.
• LIC - Huge low income countries (India and China) progress along increasing prosperity and WB. Predominance of financial and market priorities hamper the construction of strong institutions for redistributive policy and internal inequality increases.
REDUCED GOVERNMENT: OUTPUTS
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
Bloc 1980 1990 2000 2005 2010 2020 2030North Europe 78,6 80,0 68,8 75,0 70,6 75,0 81,3UK 69,4 73,0 71,1 70,0 68,3 67,5 73,7West Europe 64,9 63,9 64,2 65,3 67,2 69,2 76,1East Europe 67,5 61,7 56,1 54,2 56,0 59,7 62,5South Europe 56,0 54,3 56,0 60,9 57,8 57,5 63,0USA 69,5 71,6 73,7 71,3 66,7 67,8 72,5East Asia High Income 76,5 72,1 75,0 77,6 76,9 79,2 81,6Japan 73,1 72,9 73,3 73,8 75,3 87,3 93,7Other Developed 70,0 68,6 67,5 69,8 69,6 71,4 78,0CIS 71,8 68,6 61,7 64,8 63,2 67,0 72,3North Africa 48,3 46,3 44,8 46,2 46,6 47,7 53,1West Asia 46,5 51,0 49,6 46,5 44,6 47,3 51,5Central America 63,5 53,7 61,2 62,5 60,2 66,7 75,0South America 58,0 55,1 57,1 62,1 63,6 70,7 78,9China 80,5 79,3 79,6 78,7 79,2 83,6 87,4India 70,1 62,3 57,1 56,4 54,3 56,2 61,6Other Africa 68,1 59,7 59,2 59,2 56,5 55,7 55,6Other East Asia 71,7 72,2 69,8 69,4 70,1 71,8 77,2Other South Asia 76,1 68,1 59,6 60,2 58,6 57,2 59,5
Employment rate recovery in 2030, but still insufficient in weak blocs
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• Income inequality increases (UK, South), higher than in the ‘80s and ’90s and does not diminish
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
CHINA US INTERVENTION: ASSUMPTIONS
Economic Social Institutional More balanced growth
allows better social adjustments in China and US
Reduced disparities in China
Limited effects on growth of the other regions and persisting income inequality
Disadvantage for re-localization in India
Small increase in immigration; emigration patterns similar to the existing ones
High job creation in USA and reduced delocalization, but slow recovery in employment rates (high growth of working-age population)
No significant mdifications in the urbanization trends
increased social cohesion policy in China and USA and marginal changes in other blocs
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• Effective and extended social policy in China, associated with fast growth and inclusion of an increasing amount of people in prosperity.
• Important disparities in well-being still characterize the global economy
• Limits in the economic development and social inclusion of many countries: due to less employment and less resources for well-being. The predominant model of development gives little space to social issues.
• Countries with a similar initial level of well-being (USA and Europe; China and other Asiatic countries) increase their disparities in 2030.
CHINA US INTERVENTION: OUTPUTS
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
REGIONALISATION: ASSUMPTIONSEconomic Social Institutional
Higher GDP growth and public expenditure in all the blocs (exceptions of South America and Other Africa)
Reduced income inequalities
Increasing immigration in the main integrated groups of countries
Improved employment conditions
Security and access to WB should be favored by social inclusion, regional cooperation and public investments
New or renewed institutions are needed for social policies
Social and economic improvements in “neighboring” countries favor democracy and WB
Reduced redistributive conflicts within countries
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• Many countries of different income levels improve their WB. Several high income countries avoid a deterioration of their WB and many middle and low income countries can significantly improve it.
• For low and middle income countries the improvements in WB are significant and coexist with an increasing integration of life styles and social expectations with high income countries.
• A risk of isolation and marginalization, though present, is different in South America and Africa.
• Economic development requires strong national and regional institutions to support WB values. An inevitable muddling through process in institution building is common to all three regional groups, but reduced financial pressure and an increasing interest of market forces in social cohesion allow for a learning process.
REGIONALISATION: OUTPUTS
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
MULTIPOLAR COLLABORATION: ASSUMPTIONS
Economic Social Institutional Rapid development of low-
income countries in Africa and South Asia
South America and India maintain a high rate of economic GDP growth
Room for increasing public expenditure and redistributive policy
Slight increase in migration flows towards more developed countries
China becomes an immigration country
Increasing urbanization Global effort to improve
energy security and saving Significant improvements in
employment rates, especially for women in Europe and US
Global cooperation for dealing with social problems
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• Global disparities in fundamental dimensions of WB are strongly reduced: acceleration in reaching basic levels of WB in low income countries; consolidation of welfare in middle income countries; recovery in WB expenditure in high income countries.
• Low income countries benefit significantly from increasing economic support and a general cooperative approach to trade and technology. The development of institutions for supporting WB is an important challenge in these countries.
• Institution building at the global level is a complex task. Regulation of trade and financial imbalances is associated to a parallel regulation of social standards and labor market conditions, as well as environmental rules.
MULTIPOLAR: OUTPUTS
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• A reduction of disparities in the main well-being dimensions continues
• In high income countries this trend can be combined with increasing inequality and deterioration in the standard of life within the blocs and the countries, especially in Europe,
• In middle income blocs (CIS, South America, North Africa and West Asia) well-being requires higher integration into the world economy as well as internal adaptations to promote social policies.
• The low income countries, especially in Africa, could suffer from isolation and need an increase in speed of growth for reaching basic standards of well-being
Will the WB continue to converge among countries/ blocs at the global level?
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• The scenarios suggest the need for significant social and economic transformations in many countries:• Europe is witnessing a divergence in well-being among
countries and a revision of the welfare system is required. • Other rich countries experience a similar transformation,
including the USA, which continues to fund its WB on growth. • China counteracts the increasing and unequally distributed
well-being by putting into place a stronger redistributive policy. This can require change in the economic development model as well as in social and political organisation.
Will inequality increase? And in this case, will its effects on WB be socially acceptable in the future?
Accademia Lincei, Rome, ITALY AUGUR
AUGUR workshop, 14-16 March 2012
• According to the different scenarios, economic cooperation and a minor exposure to financial imbalances are important conditions for increasing WB
• This implies the necessity of renewed institutions and public policy at both national and international levels
• Political commitment is crucial: the priority dedicated to WB is not neutral and a trade off can exist between WB and market priorities.
Under which conditions will WB changes be consistent with economic development?