We were all lucky to be born at the right time. Over the past 50 years, world GDP growth has been averaging 3.6 percent, driven by employment increases and productivity improvements in roughly equal proportions. An exhaustive and important study by the McKinsey Global Institute concludes that during the next 50 years, population growth will decline to 0.3 percent annually. If productivity continues to contribute 1.8 percent, overall growth will decline to 2.1 percent, a rate 40 percent less than during the past half-century. The implications of this slowdown on global changes in the standard of living and investment opportunities could be enormous.

The developing world can improve its growth potential by adopting operational practices and technology used by the advanced countries (that is, by catching up), but the United States, Europe and Japan will continue to depend heavily on innovation to approach anything like their historical rate of growth.

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