The Challenge of the Century: Inclusive Growth and Development

WHILE INCOME INEQUALITY between countries has declined significantly over the past 20 years, it has grown markedly within countries. A combination of accelerating technological change, global integration, domestic deregulation and immigration has been driving major changes in labour markets in most advanced countries. This has resulted in heightened dislocation, pressure on median wages and insecurity — even though these countries have enhanced efficiency and overall national income. At the same time, many developing countries have had difficulty diffusing the benefits of rapid growth and industrialization widely enough to satisfy rising social expectations. The result: In rich and poor countries alike, social inclusion is a burning political issue.

The dawning Fourth Industrial Revolution appears likely to accelerate the forces of dispersion. Advanced technologies are being applied and combined in ways that promise to transform multiple industries. In particular, the increased sophistication and declining cost of industrial robots and artificial intelligence are projected to transform manufacturing and services in a variety of sectors in coming decades, leading to major job losses.

Social impatience with stagnation is spiking in advanced countries, as dramatically illustrated by the Brexit vote and the 2016 U.S. presidential election. A widespread sense of frustration is contributing to the growing popularity throughout the West of political parties that challenge the fundamental tenets of the post-war liberal international economic order. At the same time, increasingly- educated and connected populations in developing countries are raising their own demands for more widely-shared economic opportunity.

Government, business and other leaders from every region have been calling for a way to turn the current vicious cycle of stagnation and dispersion into a one in which greater social inclusion and sustainable growth reinforce

The framework described herein will inform the development of the WEF’s new Centre on the Fourth Industrial Revolu tion. Based in San Francisco, it will examine governance considerations related to emerging technologies, including cross-cutting societal issues such as those addressed here. Through this initiative, the World Economic Forum seeks to contribute to a better appreciation within societies of how to make inclusive growth and development a reality at a time of accelerating change.---