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India will be among the four new members at G7 by 2020
As one group of mavens pores over the latest figures to project growth for the next fiscal year, at least one another seems involved in a more long-term, multi-country exercise. A recent paper on policy modelling identifies emerging trends in the world economy during this decade and beyond.
The study forecasts that by 2020, the G7, the grouping of the seven-largest industrialised economies formed in 1975-76, would have the following member countries (in decreasing order of economic size): China, the US, India, Japan, Russia, Germany and Brazil. It suggests four new members at the global high table.
The paper does add that the US and other advanced economies will remain far ahead of developing Asian nations in terms of per-capita output and incomes, for decades. But it also notes that a massive reconfiguration of the world economy is unfolding in the here and now, and it will be completed in the next 10 years. It is reiterated that the emergence of Asia from the general malaise of underdevelopment is the 'great economic success story' of our times.
It has created a conducive environment for economic growth built on globalisation, and led to massive accumulation of human and non-human capital over decades. And further that the leading performers of this growth paradigm - first Japan, then the Asian Tigers, next China and lately India - have changed the course of economic development in Asia and across the world.
Already, international comparisons, whether based on purchasing power parities (PPP), or exchange rates, do show that China is now the second-largest economy. The expert take is that China is only about half that of the US economy, but it is growing much faster. Hence, the paper posits that 2018 is the 'most likely date for China to become No. 1, in PPP terms to begin with'. The second major trend envisaged is that developing Asia will overtake the original G7 in 2018. The trend will be largely driven by the rapid growth of China, 'but India will also make a significant contribution'.
Growth in the Asian Tigers - Hong Kong, Singapore, South Korea and Taiwan - is expected to decelerate, but all except Hong Kong should grow more rapidly than the world economy. And the final trend is that India will overtake Japan, Russia will go past Germany, and Brazil best the UK, giving rise to the 'new world economic order by 2020'.
How does the paper arrive at these conclusions? There is much number crunching, time-series analysis and econometric exercises involved. The real output and input, as well as productivity - which is the ratio of real output to real input - for 122 countries for the period 1990-2008 were computed by the authors.
Next, the sources of growth for the world economy segmented into seven regional groupings were factored in, as also those of 14 major economies during the periods 1990-95, 1995-2000, 2000-05 and 2005-09. The authors then go on to project the potential growth rate of labour productivity and gross domestic product (read: output) for 122 countries, over the 10-year period 2010-20.
The paper mentions that as recently as 2000, the G7 economies accounted for more than half of world GDP, while developing Asian nations made up for just under 20%. The 16 economies of Developing Asia generated only about 13% of world output in 1990, but that their growth surged to a huge 64.9% of world growth during 2005-09. Their rise seems almost a mirror image of the decline of the G7.
The paper observes that world input per capita has converged more rapidly to US levels than world productivity. It points at the need for faster diffusion of technology and methods of organising output using up-to-date techniques and information technology. The share of IT in the contribution of capital input for the world economy has, however, declined to less than a quarter, after 2005.
In projecting future growth scenarios, the study assumes that growth rates in China would fall, but remain in the 'neighbourhood of 7.5% per annum'. As for India, a GDP growth rate of 6.5% is projected, which is on the lower side of the recent trend. A higher growth path would require sustained policy proactivity. As for the US, the paper is explicit that its role in the world economy has 'permanently changed, and not for the better'.
The transformation, in relative terms, will unfortunately strengthen populist forces on the left and right of the political spectrum, avers the paper. It expects US productivity levels to decline somewhat over the next decade.
India will be among the four new members at G7 by 2020 - The Economic Times
As one group of mavens pores over the latest figures to project growth for the next fiscal year, at least one another seems involved in a more long-term, multi-country exercise. A recent paper on policy modelling identifies emerging trends in the world economy during this decade and beyond.
The study forecasts that by 2020, the G7, the grouping of the seven-largest industrialised economies formed in 1975-76, would have the following member countries (in decreasing order of economic size): China, the US, India, Japan, Russia, Germany and Brazil. It suggests four new members at the global high table.
The paper does add that the US and other advanced economies will remain far ahead of developing Asian nations in terms of per-capita output and incomes, for decades. But it also notes that a massive reconfiguration of the world economy is unfolding in the here and now, and it will be completed in the next 10 years. It is reiterated that the emergence of Asia from the general malaise of underdevelopment is the 'great economic success story' of our times.
It has created a conducive environment for economic growth built on globalisation, and led to massive accumulation of human and non-human capital over decades. And further that the leading performers of this growth paradigm - first Japan, then the Asian Tigers, next China and lately India - have changed the course of economic development in Asia and across the world.
Already, international comparisons, whether based on purchasing power parities (PPP), or exchange rates, do show that China is now the second-largest economy. The expert take is that China is only about half that of the US economy, but it is growing much faster. Hence, the paper posits that 2018 is the 'most likely date for China to become No. 1, in PPP terms to begin with'. The second major trend envisaged is that developing Asia will overtake the original G7 in 2018. The trend will be largely driven by the rapid growth of China, 'but India will also make a significant contribution'.
Growth in the Asian Tigers - Hong Kong, Singapore, South Korea and Taiwan - is expected to decelerate, but all except Hong Kong should grow more rapidly than the world economy. And the final trend is that India will overtake Japan, Russia will go past Germany, and Brazil best the UK, giving rise to the 'new world economic order by 2020'.
How does the paper arrive at these conclusions? There is much number crunching, time-series analysis and econometric exercises involved. The real output and input, as well as productivity - which is the ratio of real output to real input - for 122 countries for the period 1990-2008 were computed by the authors.
Next, the sources of growth for the world economy segmented into seven regional groupings were factored in, as also those of 14 major economies during the periods 1990-95, 1995-2000, 2000-05 and 2005-09. The authors then go on to project the potential growth rate of labour productivity and gross domestic product (read: output) for 122 countries, over the 10-year period 2010-20.
The paper mentions that as recently as 2000, the G7 economies accounted for more than half of world GDP, while developing Asian nations made up for just under 20%. The 16 economies of Developing Asia generated only about 13% of world output in 1990, but that their growth surged to a huge 64.9% of world growth during 2005-09. Their rise seems almost a mirror image of the decline of the G7.
The paper observes that world input per capita has converged more rapidly to US levels than world productivity. It points at the need for faster diffusion of technology and methods of organising output using up-to-date techniques and information technology. The share of IT in the contribution of capital input for the world economy has, however, declined to less than a quarter, after 2005.
In projecting future growth scenarios, the study assumes that growth rates in China would fall, but remain in the 'neighbourhood of 7.5% per annum'. As for India, a GDP growth rate of 6.5% is projected, which is on the lower side of the recent trend. A higher growth path would require sustained policy proactivity. As for the US, the paper is explicit that its role in the world economy has 'permanently changed, and not for the better'.
The transformation, in relative terms, will unfortunately strengthen populist forces on the left and right of the political spectrum, avers the paper. It expects US productivity levels to decline somewhat over the next decade.
India will be among the four new members at G7 by 2020 - The Economic Times
