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Back to the Future

Eliana Cardoso's picture

Imagine if, in 1799 – the year in which Napoleon seized power – a research institute had published its global forecasts for the next 20 years. Its researchers would have known about the tremendous changes that took place over the previous two decades: from the United States’ declaration of independence, through the French Revolution and the execution of Louis XVI, up to Napoleon’s victory over Austria in his Italy Campaign.

Even so, the chances of the researchers accurately predicting the events that came to pass over the subsequent 20 years, including their impact on the 19th century’s world order, would have been infinitesimal. No one could have anticipated that Napoleon would have plunged Europe into non-stop war for a decade until being overcome at Waterloo, or that, by the time of his defeat, he would already have swept away the foundations of traditional structures and initiated an unstoppable wave of reforms.

Because of its industrial might, this Europe would dominate the rest of the world during the 19th century. When European rivalries exploded into World War One, the face of the earth had already changed considerably compared to the previous century. And, having changed the world, Europe set the conditions for the demise of its own empire. Even before World War One, Teddy Roosevelt had heralded the start of the United States’ ascension to its current hegemony.

China grew faster than its target and most projections in 2009 – what are the key takeaways?

Louis Kuijs's picture
Click image to enlarge.

China’s economy grew 8.7 percent in 2009. This was more than the 8 percent target, despite the global recession that caused global output excluding China to fall about 3 percent. China’s growth outcome is substantially higher than projections made in early 2009. For instance, in our  World Bank quarterly economic update (of which I am the lead author) we projected 6.5 percent GDP growth and some other forecasts were even lower (see Figure 1).

How did these forecasts come about, and what lessons we can draw from the experience of China’s growth in 2009? I cannot speak for my colleagues at the World Bank, let alone for other economists. But, all in all, while I have learned important lessons, I am not sure how differently I would see and do things if again presented with a situation like we were in a year ago.