From Project Syndicate:
Project Syndicate: You, Anu Madgavkar, and Sven Smit recently pointed out that “economic dynamism and improvements in living standards are vital both to finance climate action and to ensure adequate public support for it.” In your new book, Permacrisis: A Plan to Fix a Fractured World – co-authored with Gordon Brown and Mohamed A. El-Erian (with Reid Lidow) – you highlight major growth headwinds, including “trends that have reduced the supply elasticity of the global system.” In what ways should this new supply environment change how we think about economic growth and stability?
Michael Spence: The last two decades brought a massive increase in productive capacity, as rapidly growing emerging economies, especially China, were integrated into the global economy. As a result, the supply side was not a significant constraint on growth. In fact, global growth remained largely robust even as productivity declined, though there were, of course, some setbacks, such as during the 2008 global financial crisis.
This has changed.
More here.