Warning over infrastructure spending
"Far-reaching reforms" are needed to assist global investment in areas such as infrastructure, a report says.
The warning comes from the Group of Thirty - a body made up of senior international economists including the former head of the European Central Bank (ECB), Jean-Claude Trichet.
He said the reforms were "critically important" for growth.
Mr Trichet added that without them, global economies could see "significant" shortfalls in financing.
The report suggests that major economies may need to raise nearly $19tn in long-term investments by 2020 - compared with $12tn in 2010 - to achieve even moderate levels of economic growth.
This was based on research from the consultants McKinsey, which looked at funding in nine major economies worth 60% of global gross domestic product (GDP).
The Group of Thirty argue that it needs to be made easier to bridge the gap between global savings and long-term investment - otherwise countries will struggle to find the necessary funding for expanding infrastructure, factories and education.'Challenging and contentious'
Three main factors are blamed for the likely constraints on long-term finance.
- New rules for the banking industry - including demands for higher capital - which makes banks less likely to fund big projects
- Governments dealing with large public debts
- Ageing populations - with older investors shifting their portfolios towards lower-risk assets and out of equities, a crucial source for company investments
As a result, national governments are being urged to consider more private-public partnerships, while new guidelines are suggested to make it easier for pensions funds and sovereign wealth funds to make long-term investments.
One suggestion is for new financial instruments to be developed that mitigate the risks involved in long-term investments and make it easier for money to flow across borders.
"Some of our proposals are challenging and contentious and would take time to implement," said Lord Turner, Chairman of the UK Financial Services Authority and part of the Group of Thirty.
"But their merits should be assessed carefully, given the importance of actions that explicitly strengthen the supply of long-term finance."
He also suggested creating pay incentives to make fund managers focus on longer-term returns.
"Portfolio managers' bonuses could be conditional on their performance over a defined period, for senior managers, a minimum of three years," he said.