Construction and Analysis of a Global GDP Growth Model for 185 Countries through 2050

Abstract

This article presents the construction and analysis of a long-run GDP growth model, including sample results, its sensitivity to parameter choices, and explanations of the concepts underpinning it. It is designed to be flexible so that scholars can use it with their own assumptions and parameter choices to customize results. The model estimates GDP as a function of labor force, capital stock, and total factor productivity (TFP) for 185 countries through 2050 under alternate scenarios. It provides rough estimates for real exchange rates, poverty indices, median and percentile incomes and consumption levels, and the populations of the lower, middle, and upper income classes. The model also provides additional evidence for the TFP convergence phenomenon and the effect of the state failure on TFP growth. It can further be used to model stocks, accessibility, and investment requirements for 10 infrastructure sectors. The model can yield counterfactual estimates and actual and roughly estimated comparable historical data for most of the projected series, provided in identical units. For 126 countries, such series (e.g., TFP) are provided back through 1956, and for some even earlier.

How Aging Societies May Affect Global Growth Prospects

“…In the model GDP is estimated as a function of employment (number of workers), capital stock, and TFP for 187 countries between 2015 and 2050 under four different growth scenarios that we call "Central," "Best-Policy Optimistic," "Productivity Growth Optimistic Scenario," and "Pessimistic." This section offers an abbreviated description of the model; a more detailed exposition, in Kohli, Szyf, and Arnold (2012), is available on request. 28 As seen in Equation 4, a Cobb-Douglas function with constant returns to scale is assumed, with α equal to two-thirds:…”

“…The difference between the scenarios is how countries are classified, as converging, half-converging, non-converging, or failed; how countries gradually transition between classifications; and the value of the convergence coefficient. The specifications and timing of this sequence is paralleled in Kohli et al (2012).…”

“…For a detailed discussion of the methodology, including for projections of market exchange rates and of income classes and poverty, please see Kohli et al (2012). 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 (Table A1.2 Continued) 25.…”

“…28. This annex is based on Kohli (2011), but it has been updated with the methodology revisions detailed in Kohli et al (2012), in which more details about the methodology and its derivation can be found. 29.…”

Africa 2050

“…This study estimates GDP as a function of labor force, capital stock, and TFP for 186 countries between 2013 and 2050 under three different growth scenarios, the "Convergence Scenario," "Business-as-usual Scenario," and the "Downside Scenario." This section offers an abbreviated description of the model; a more detailed exposition, in Kohli et al (2012), is available on request. 19 As seen in equation ( 1), a Cobb-Douglas function with constant returns to scale is assumed, with a equal to twothirds:…”