London: 2010-20 will be a lost decade for the world economy, according to Cambridge-based macroeconomist Michael Kitson, who said a 'paradigm shift' in economic thinking should follow the doldrums of recession.
Notwithstanding limited growth within the economies of Brazil, Russia, India and China (BRIC), he warned that there is potential for very poor global performance over the coming decade, a statement from the University of Cambridge's Judge Business School said.
According to Kitson, the world economy and individual countries like Britain need a high level of aggregate demand and continued investment in new technology and innovation coupled with a renewed approach to economic thinking.
"We shouldn't think that economics is a science that's fixed. Economics likes to think of itself as a science like Physics - it's not. It's about behaviour. It's about why firms do what they do and why individuals do what they do," he said.
The world has seen shifts in the past often following big seismic shifts to the economy, Kitson said adding that the great depression of the 1930s ushered in Keynesian economics.
"The stagflation, stagnating economy high inflation of the 1970s, ushered in new thinking - monetarist economics. We've now got this world depression, world stagnation, it's time to usher in some new economic thinking," the senior lecturer in Global Macroeconomics at Cambridge Judge Business School said.
First Published: Monday, August 27, 2012, 21:32