A New Development Paradigm

Will we transcend GDP as the primary measure of development?

Some alternative measures to GDP have been proposed, such as the GPI, the HDI, and the HPI. These measures try to capture the net progress of a society, not just its total output, and consider other aspects of development, such as environmental factors, income inequality, and the emotional well-being of the population. These measures can complement GDP and help to inform policy debates, but they are not likely to replace GDP as the main measure of development in the short and medium terms.

What will be the foundations for a new social contract in a green and digital era?

A new social contract needs to account for the interconnectedness that characterizes today’s interdependent world. No country can respond alone to the transnational challenges that our planet confronts, neither provide the global public goods that people demand. Therefore, we need to redefine the social contract and update its tenets to a new green and digital era, transcending national borders in order to leave no human being behind. This must be a new pact with the planet and its sustainability, ensuring a green transition that preserves biodiversity and the climate. It also needs to be a firm commitment to future generations, harnessing the potential of newer technologies and equipping people with the means to navigate the digital transformation. In summary, we need to regain the trust in institutions and civic life, something that can only be achieved if our populations have the certainty that they can thrive in live by relying on the communities they belong to. A new social contract must deliver global rights and duties for global citizens.

Will increasing automation and technological advancements benefit everyone?

People have always feared that technology will take their jobs away, as Professor Robert

Schiller from Yale University explains in his work on “Narrative Economics”. He traces this “Technological Unemployment Narrative” back to ancient times, even to Aristotle. But AI makes this narrative stronger and more widespread. It is not only affecting “blue-collar workers” as it did in the past, as portrayed in the Charles Chaplin movie “Modern Times”, but also “white-collar workers” in fields like medicine, law, or finance who used to benefit from automation.

We don’t know yet if automation will generate more jobs than it will eliminate in the AI era. However, some studies by Daron Acemoglu from MIT, Jonathon Hazell from the London School of Economics, and Pascual Restrepo from Boston University and NBER indicate that there will be winners and losers among the current workers. Using data from online job ads in the United States from 2010 to 2018, they show that AI-related jobs are increasing fast in establishments that use AI-compatible tasks. But these establishments also cut down hiring in other roles and change the skill requirements of the remaining jobs. This means that workers with AI-related skills will have more chances, while workers without them may struggle more. This may further worsen the inequality within and across countries.