Warwick Economics Summit 2025
[Video message]
Fellow economists,
Ladies and gentlemen,
Dear friends,
Economics, at its core, is about making choices – choices in the face of uncertainty, choices that shape policies, choices that define our collective future.
The question then is how to make the best choices in today’s world, where information is so incomplete, uncertainties are so high and the forces shaping our world are so non-linear.
Often it feels like we are walking in the mist.
This is why today I bring to you not clear, clean facts, but complexities, contradictions and paradoxes.
Because by grappling with these paradoxes, rather than trying to simplify them away, we can better understand both what's holding us back and what might propel us forward.
There are three paradoxes I want to emphasize.
The first paradox is one of slow growth but fast change.
While global GDP growth is expected to hover around 2.7% this year – below pre-pandemic trends – at the same time we're witnessing unprecedented technological transformation.
When the clean technology market is projected to match today's oil market in just a decade, when artificial intelligence is rewriting the rules of productivity and the labour market, why isn't this translating into faster growth?
Part of the answer lies in how unevenly the benefits of these technologies are distributed – both within and between countries – hampering the diffusion rate of the new technologies and the spread of the profits more widely given the high market concentration. But another part of the answer is the erosion of the traditional drivers of growth – trade and investment – both of which show signs of weakness at the moment.
This paradox points to a deeper challenge for developing countries. The traditional path to development through industrialization and structural transformation is narrowing down.
Two forces are at work. First is rising protectionism, which means that not all countries can increase their manufacturing exports at the same time. And second, and perhaps more fundamentally, is the fact that automation is making manufacturing less labor-intensive.
So even in a world without trade barriers, we would face this challenge.
This means countries need to look toward new engines of growth – in services, in the creative economy, in e-commerce, in clean technologies and in the digital revolution.
These are the sectors where jobs and opportunities are increasingly found.
And this is why fighting the issue of the inequality of innovation is so fundamental.
The second paradox is one of enormous wealth alongside crushing debt.
We live in a world of astronomical resources. Global GDP has reached one hundred $115 trillion – ten times what it was in 1981.
And yet, 3.3 billion people live in countries spending more on debt servicing than on health or education.
African nations pay four to eight times the interest rates of developed countries, despite having half their debt ratios.
The money exists. Total global assets under management will reach $145 trillion this year. The problem isn't scarcity, it's allocation.
Today, only 2% of all foreign direct investment goes to Africa and only 5% of sustainable funds reach the developing world. Without fixing the international financial architecture, development will always be an uphill battle.
This year’s Fourth Financing For Development Forum will be a key opportunity in that direction.
The third paradox lies in the story of the Global South itself.
In the next five years, the world economy will grow by $55 trillion PPP dollars.
Of these, $40 trillion will come from the Global South. This represents a huge shift in economic gravity.
Yet this success comes with its own contradictions.
Even as South-South trade flourishes, we see increasing fragmentation and barriers to development. Many nations, particularly least developed countries, remain stuck at the margins of global trade, never exceeding 1% of global trade flows and 1.5% of GDP despite having 13% of the global population.
Many middle-income countries are also struggling. Of the 3.3 billion people who live in countries that spend more on debt servicing than on health or education, 3 billion are in middle-income countries.
These numbers have important implications beyond economics.
We see this most acutely in the erosion of the aspirational contract – the implicit promise that each generation will live better than the last, an issue that even rich countries are seeing.
In many countries, young people with more education than their parents are experiencing lower real wages and fewer opportunities. This paradox strikes at the heart of development itself.
Traditional metrics of progress – GDP, poverty, infrastructure – while crucial, are no longer sufficient guarantee of sustained social progress.
This paradox manifests differently across regions.
In parts of Latin America, we see universities producing graduates who can't find jobs matching their skills. In Africa, rapid urbanization has created megacities without the industrial base to support them. In Asia, some countries have built world-class export sectors that remain disconnected from their domestic economies.
This heterogeneity is important since it influences our narrative of development itself.
The Global South is at the same time home to the most troubled economies of the world, but also the engine of 70% of world GDP. It is both more powerful, and yet more poor.
In those sides lies the potential, and the challenge, of our times.
To close, allow me to say something directly to you, the next generation of economists gathering today at Warwick.
These paradoxes I've outlined are not just academic puzzles – they will be the defining challenges of your careers.
As you leave these halls to work in government, in international organizations, in the private sector, you will be tasked with navigating them.
And perhaps that's fitting. Because economics has always advanced most when forced to grapple with paradox – when our elegant models meet messy reality.
Your generation must bring new perspectives, new tools and, most importantly, new questions to these challenges.
You must understand instinctively that economics must go beyond efficiency to address equity, beyond growth to address sustainability, beyond averages to address distribution.
There is much at stake, and we must spare no efforts.
I thank you.