“The World Bank's Global Economic Prospects reiterates what many other think tanks have said before: we are in the midst of an unparalleled economic boom. And though the pace of expansion may be slow over the next two years, global economic growth will be faster in the next 25 years than in the previous quarter century.



More important, this growth will increasingly be powered by developing countries whose per capita incomes will rise 3.1 percent a year, up a whole percentage point from the earlier period. In absolute terms, this will take per capita incomes in the developing world to $11,000 by 2030, comparable to per capita incomes in the Czech and Slovak republics today.

Not surprisingly, poverty will decline with numbers below the $1-a-day poverty line halving to 550 million, despite the increase in population over the period. Best of all, the World Bank estimates the basic long-term trends, if not the exact growth rates, 'impervious to all but the most severe and sustained shocks'.



If that seems to suggest countries can happily free-ride on the global boom without doing anything themselves, the report quickly disabuses readers of that notion. Widening inequality, growing labor market tensions and new environmental pressures could derail the entire process. Also, policy responses will determine whether countries are able to cash in on this extraordinary constellation of the forces of fast growth with low inflation and interest rates to raise their living standards or get left behind.



The reason, as the report points out, is that even in the most propitious environment, policies will be needed to cushion adjustment costs associated with rapidly changing demands of the work place. This is particularly important since advances in technology will render many skills redundant even as rewards for the right kind zoom. The resultant rise in inequalities will, therefore, need to be mitigated by labor market policies aimed at protecting workers rather than jobs. Unfortunately, our present labor policies do just the reverse. And this is the most important takeaway for India's policy makers: get pension reform going; scrap rigid labor laws.”