To measure the effects of external shocks (or economic policies) on poverty and on the distribution of welfare among individuals and households, the microeconomic simulation in the GIDD (Global Income Distribution Dynamics) framework models how households would react to changes in relative commodity and factor prices generated from LINKAGE, incorporating into the analysis demographic and occupational characteristics of each household (Bourguignon and Bussolo, 2013). Based on the International Income Distribution Database of the World Bank, the GIDD currently includes harmonized household survey data for 121 countries, covering approximately 90 percent of the world’s population. The GIDD also allows for the analysis of impacts on global income distribution from global growth scenarios. It also includes the ability to distinguish changes due to shifts in average income between countries from changes attributable to widening disparities within countries.

# **The baseline scenario**

To capture the main global trends and Africa’s role in the world economy to 2025, the baseline scenario incorporates key drivers of economic growth including demographic changes, technological catching-up and capital accumulation. The projections are generally consistent with long-term trends used by the World Bank (2013, 2012), adjusted for more recent data up to 2010 and the separation of specific African countries.

The first decade of the 21<sup>st</sup> century saw an acceleration of growth in developing countries: average growth jumped from 3.3 percent per year during 1980–2000 to 5.8 percent per year in the 2000s. In the baseline scenario, developing countries will continue to grow at an average 5.2 percent a year, compared with 1.7 percent for high-income countries over that period. The slight slowing of developingcountry GDP growth in the future is due to aging, slower growth in the labor force, and the slowing of technological progress as the large emerging countries shift towards the production of services. All told, global GDP is expected to grow at an average annual rate of 3 percent between 2010 and 2025.

Measured at constant 2007 prices, the global economy would reach $97 trillion in 2025, up by almost 70 percent from the $60 trillion in 2010. Within the global aggregate, developing countries will more than double their GDP from $18 trillion to $38 trillion (see Figure 1), increasing their global share from 31 percent to 39 percent.<sup>3</sup> China would account for 28 percent of growth in global real output and 43 percent of growth in output of today’s low- and middle-income countries up to 2025.

Africa will continue its remarkable rise. The SSA region is expected to double its size from around $1 trillion in 2010 to above $2 trillion in 2025 (measured at constant 2007 prices). Its per capita GDP growth, at 3.1% a year, matches closely the 3.2% performance of other developing countries (Figure 2). No longer lagging, the region is expected to maintain a roughly constant share of the income of developing countries. Its share of the world economy is expected to increase slightly from 1.7% in 2010 to 2.1% in 2025.

> 3 Evaluated at 2007 market exchange rates and constant prices. The rapidly emerging economies would normally be associated with rising real exchange rates so that their weight in the global economy will actually be measurably higher in value terms than in constant price volume terms.

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