The world in the future

Predicting the future is very difficult, largely because almost anything can happen, and events will always surprise us. However, it is very likely that the world in the future will be very different to the one we live in now. And within my lifetime, one can be reasonably confident the US will decline from being the sole superpower, to a multipolar world, with China and India as world powers almost as powerfull as the US.

The Economist has a good graph here, showing projected economic growth rates over the next two years, showing the % by which their economies will grow this year and next year. The results are:
China: 19% (and this is already a big economy- watch out)
India: 17% (another 2 years of spectucular growth on the way)
Russia: 12%
Brazil: 9%
South Africa 8%
Mexico: 4%
Britain: 3%
Eurozone: 2.5%
Japan: 2.4%
US 2% (no doubt reduced by the current economic problems)
The trend is clear. The developing countries are growing rapidly, while the rich countries are growing slowly.

If these trends continue (and they are likely to do so), the rapidly developing countries will make up a much larger share of the World economy.
In 2003, Jim O’Neil, a Goldman Sachs economist, invented the new term “BRIC” (an acronym for Brazil, Russia, India, and China) to identify countries he thought would become major players in the world economy in 2050. This arguement was outlined in the Goldman Sachs paper “Dreaming with BRICs: The path to 2050” (avaliable here), in which Goldman Sachs created a model to forecast future economic growth, and entered data into it for the BRIC countries, and also the G6 (US, UK, France, Germany, Italy and Japan). To test the acuraccy of the model, the same test was applied for the period 1960-2000, for the G6 countries, and South Korea, Hong Kong, India, Brazil and Argentina, and turned out to be remarkably accurate, with the exception of Brazil, Argentina and especially India, where growth was much lower than the model predicted, and the model slightly underestimated growth in South Korea, Japan and Hong Kong. In a 2005 follow up paper here they looked at 11 other emerging countries (including Indonesia, South Korea, Mexico, Nigeria, and Turkey), all of which (except Turkey) will also grow strongly and play a larger role in the world economy.

Lets compare the world in 2005 to their projected 2050 world (the figures not in brackets are GDP in billion $US 2005, GDP per capita is in brackets, with countries listed by size of their GDP, the 2005 follow-up paper is used for the 2050 projections). The change to the top 12 is particularly interesting:

2005:                                            2050:
United States 12 454 ($42 114)     China 48 571 ($35 105)
Japan 5 293 ($41 538)               United States 37 666 ($89 663)
Germany 3 062 ($37 146)              India 27 235 ($17 011)
France 2 314 ($38 151)                 Japan 8 040 ($80 492)
United Kingdom 2 261 ($37 411) Brazil 8 028 ($35 143)
China 1 918 ($1 468)                    Mexico 7 838 ($52 990)
Italy 1 185 ($32 446)                     Russia 6 162 ($55 630)
Canada 1 156 ($35 226)                Germany 5 440 ($73 904)
South Korea 814 ($16 741)            United K. 5 067 ($79 203)
Russia 754 ($5 257)                      France 4 483 ($79 807)
Mexico 753 ($7 092)                     Indonesia 3 923 ($11 668)
Brazil 747 ($4 013)                       Nigeria 3 708 ($10 402)
India 746 ($691)                          South Korea 3 684 ($81 462)
Turkey 349 ($5 013)                   Italy 3 128 ($62 083)
Indonesia 272 ($1 122)                 Canada 2 983 ($71 993)
Nigeria 94 ($733)                         Turkey 2 757 ($31 880)

Of course, a lot can happen in 50 years, and the actual 2050 figures wil probably be quite different. But what is much more important than these figures is these trends.

The basic reason why the US is the worlds sole superpower today is because of the size of its economy, in 2005 matching those of the next 4 countries combined. A country can not afford to spend much on its military with a failed economy.

In the future this will no longer be the case. China and India will be world powers a longside the US, and there wil be a new range of not insignificent regional powers like Brazil, whose influence can also be felt. Some of the large third world countries will have economies the same size or bigger than large european countries. In short the days of the West dominating the world are over, and a whole new age of Asian and other non-Western countries dominating the world stage is about to begin.

Explore posts in the same categories: Economy, Future

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