G20 Economies Need To Increase Spending Nearly $21 Trillion By 2030 To Close Empowerment Gap: Report As per the report, even in the more advanced economies of Europe and North America, 20% to 30% of the population lives below the empowerment line
By Teena Jose
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A newly launched McKinsey research report has revealed that the reduction of the empowerment gap in G20 economies would require a cumulative increase in spending on essentials of $21 trillion by 2030.
"Our model assumes a gradual ramp-up each year, but if the increase were spread evenly, it would total approximately $2 trillion per year. This average increase represents approximately 30% of 2020 levels of spending after current government transfers," stated the report.
To put in words, establishing the empowerment line makes it possible to determine each country's empowerment gap—the percentage of the population in each country whose consumption falls short of self-sufficiency—and the dollar amount needed to bridge that gap.
Reportedly, the greatest proportion of people living below the economic empowerment line, measured as a share of total national population, live in India and South Africa (more than 75%), followed by Indonesia, Mexico, Brazil, and China (more than 50%).
It further finds that even in the more advanced economies of Europe and North America, 20 to 30% of the population lives below the empowerment line.
Furthermore, speaking about the second target of the global economy, getting on track to reach net-zero greenhouse gas emissions by 2050, the report suggests G20 economies would need to invest upwards of an additional $35 trillion this decade.
"By 2019, the global average of CO2 emissions per capita had fallen to 2010 levels of 4.8 metric tons. However, the current decade is a critical one since CO2 emissions will need to plunge by roughly 50% by 2030 to reach net zero by 2050. To achieve that goal, much of the investment needed to transition to a low-emissions economy must be made upfront to successfully transform the world's energy and land-use systems," noted the report.
Societies would need to consider greater public-private commitment and collaboration, new incentives and even bolder innovation possibilities, analysts said.
The report is a companion piece that draws on the concepts and analysis developed in a McKinsey Global Institute report, 'From poverty to empowerment: Raising the bar for sustainable and inclusive growth' which envisions to provide a comprehensive outlook of the global economy.
