Growth in the New Economy Towards a Blueprint 2026

Investment in human capital is both a driver of productivity, innovation and competitiveness, and a foundation for inclusion and economic mobility. No-regret move: focus on productivity growth Sustained growth depends on rising productivity – the ability to generate more value from the same set of resources. Productivity growth enables higher wages and supports more efficient use of natural resources. It emerges from the effective combination of human, organizational and technological capital, enabling businesses to innovate, adapt and compete more efficiently. In the new economy, where technology and knowledge are increasingly central to value creation, strengthening these interconnections is essential for long-term prosperity. While only some countries may lead at the technological frontier, all countries will need to build the capacity to absorb, adapt and apply innovation to realize technology’s productivity potential. Dilemma: how to turn technology and innovation into new sources of growth Technology is transforming the global economy at an unprecedented speed. Frontier technologies, from AI to advanced manufacturing and clean energy, are expanding the realm of economic possibility while reshaping production, security and value creation. These dynamics are particularly significant in the new economy, where fiscal constraints, geopolitical polarization and large- scale technology investments amplify both the opportunities and risks associated with innovation. Yet, while technology and innovation are necessary to accelerate growth, they can exacerbate divides within and between countries. Innovation can raise productivity and create new markets and opportunities, but it can also concentrate gains among leading firms and regions, disrupt labour markets, and outpace institutional and regulatory capacity. When the pace of technological change exceeds economies’ and businesses’ ability to absorb it, it can fail to fulfil its economic growth potential, often hampering the possibility of “leapfrogging”. It also risks concentrating rewards where capabilities are strongest, with a widening gap between actors shaping frontier technologies and those whose prospects depend on adopting and adapting what others create. To manage these complexities, governments and businesses follow a range between two approaches: competition vs coordination. Competitive dynamics spur agility, experimentation and investment as firms and nations race to commercialize emerging technologies, often accelerating early scale-up. Coordination, meanwhile, provides the standards, shared infrastructure and governance frameworks that enable technologies to diffuse widely, scale safely and reach the broader economy. Competition can accelerate breakthroughs but may fragment markets or widen capability gaps if not governed effectively; coordination can facilitate diffusion and alignment but may also slow decision-making or constrain experimentation if overly rigid. How stakeholders will balance these forces, between speed and stability, discovery and diffusion, will shape both the pace of technological progress and the realization and distribution of its economic benefits. No-regret move: invest in human capital Investment in human capital is both a driver of productivity, innovation and competitiveness, and a foundation for inclusion and economic mobility. In an era of accelerating technological change, this will become even more critical: the capacity of economies to grow will depend increasingly on their ability to develop, attract and empower talent. Expanding access to education, healthcare, and reskilling and upskilling can yield broad and enduring returns – boosting productivity, promoting innovation and enhancing societal resilience. Such investments create positive spillovers across firms, industries and borders, strengthening the collective capacity for growth.4 Dilemma: how to ensure widespread benefits from the new economy Economic inclusion represents a cornerstone for broad-based growth, development and stability. Yet, in recent years, economic divides and polarization have risen sharply within many countries,5 leading to growing frustrations with the current socioeconomic models and resurfacing debates around the best approach to ensure economic fairness and inclusion. AI and other frontier technologies risk intensifying these challenges by disrupting labour markets, weakening traditional pathways into work-based economic mobility, placing pressure on fiscal systems and further concentrating wealth and economic opportunities. Investment in human capital alone does not automatically result in fair economic integration for specific groups, particularly women, who now surpass men in higher education in many countries,6 yet continue to face barriers in labour market integration and advancement, and form a core part of the knowledge base necessary for innovation. 2.1 Technology, productivity and human capital Growth in the New Economy: Towards a Blueprint 8