many analysts to have reached the “ lewis turning point ” where demographic pressures are offset by increased demand for ( at least ) qualified labor. nevertheless, the process will likely be very gradual. as for advanced economies, biased technical progress and pressures from the emerging world as well as unemployment may work to constrain wage dynamics. a general sense of economic insecurity will lead to increase in savings. in most countries and especially in europe there is an urgent need for strong fiscal consolidation. market discipline will act powerfully to impose strong consolidation of public finance over an extended period of time. therefore, it is a valid question to ask : where will growth in world demand come from in the future? this may sound paradoxical. in most of the emerging world, demand seems to be booming, and, for many analysts future economic growth will be primarily constrained by the scarcity of natural resources and environmental pressures. these are real and unprecedented and they call for a new technological revolution. i am optimistic. history has taught us that malthus and its intellectual descendants have always been proven wrong. the whole process of economic growth was borne out of the ability of mankind to overcome scarcity through human inventiveness and technical progress. it won ’ t be different this time. i am also very optimistic in the long run on the fundamental rebalancing of the world economy. income per capita levels in the emerging world will progressively converge to those of the advanced economies and this will present gigantic market opportunities for producers in those countries. at the same time, tensions and insecurity created by differences in income and productivity levels will abate and disappear. the transition process, however, may be bumpy. unavoidably, advanced economies, especially in europe, will have to adjust to the permanent shift in world comparative advantages. they will have to increase flexibility and, above all, develop and preserve their most precious resource – human capital – through education and excellence in research. emerging economies will have to face the dual challenge of aging and reducing inequalities. during that transition period, which may last several decades, it is important that the whole process is not derailed by shocks and crisis borne out of imbalances in the world economy. this is where the twin questions – ( 1 ) of the level and distribution of global demand and ( 2 ) the level and allocation of world savings – may matter most. inside the g20, there is broad agreement on the need to rebalance aggregate demand. that

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