Growing Economies, Rising Problems
Global groups struggle with fast rise of poor nations, putting conflict on the horizon Uri Dadush, William Shaw
YaleGlobal, 23 June 2011
WASHINGTON: The rise of developing countries is transforming the global economy. Whereas for the bulk of the world’s population economic stagnation has been the rule over millennia, today’s economic growth is unprecedented. More countries – and people – are achieving rapid income growth than ever before, and developing countries are rising in the ranks of the world’s largest economies. The rise of the emerging economic powers will reshape the world economy. GDP projections for the G20 nations – based on anticipated labor force growth, rates of investment and the speed of technological change – indicate that the global economy will more than triple in size by 2050. China, the United States and India – in that order – will emerge as the largest economies, and six of the seven largest economies will be drawn from today’s developing countries. More than 600 million people will emerge from poverty in the G20 alone, and an economically influential global middle and rich class will rise around the world, more than half located in developing countries.
Though developing countries will come to dominate the global economy, they will remain relatively poor. By 2050, China’s per capita income will be only 37 percent of the US level, and India’s just 11 percent, at market exchange rates. This dissociation between economic wealth and size will complicate the ability to reach international economic agreements, as relatively poor countries with growing influence are likely to have different perspectives on many issues from advanced countries. International institutions will need to adapt to reflect the emerging power relationships or gradually become marginalized. The recent promotion of the G20 over the G8 is just one signal that the power shift has already begun. But this rapid progress is far from...
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