From Prof Jeffrey D Sachs.

Sir, Contrary to the suggestions of Larry Summers (" Why stagnation might prove to be the new normal ", December 16), there is no reason to accept or expect an era of secular stagnation. The world is living through one of the greatest technological revolutions in history: the digitisation of communications, manufacturing, computing, synthetic biology, nanotechnology and much more. The core economic challenge is to mobilise these great advances for human betterment, including not only economic growth but also greater social inclusion and environmental sustainability.

After the collapse of the housing bubble, Keynesians such as Mr Summers pinned their hopes on restoring another round of growth based on a revival of the consumption and housing spending that had collapsed in 2008. Their Keynesian tool kit has focused on temporary boosts to aggregate demand through "stimulus" packages and quantitative easing. These policies have failed, and have overlooked the real opportunity for investment-led growth built upon cutting-edge technologies that have the potential to raise productivity, lower the costs of healthcare and education, and remake America's crumbling infrastructure with environmentally sustainable energy and transport systems.

A technology-based approach will require new economic institutions, including long-term land use and infrastructure plans, technology road maps, and public financing designed to leverage private sector investments in the new technologies and sectors rather than private consumption spending. This is the emerging policy framework of sustainable development. It is not only promising for a new era of economic growth but also urgent to protect the natural environment from outmoded and environmentally destructive technologies.

Jeffrey D Sachs,

Director, The Earth Institute,

Columbia University,

New York, NY, US