A Look Forward in the Global Economy

Beijing, the World's 10th Most Polluted City.

Beijing, the World’s 10th Most Polluted City.

The Organization for Economic Cooperation and Development released some interesting data yesterday, which was picked up on by the Guardian’s Datablog.

First, have a look at the three minute video produced by the OECD highlighting its findings.

Then have a look at the Guardian’s Datablog graphics, which provide a side-by-side comparison of the composition of the global economy in 2011 and the projected figures for 2060.

The key takeaway point here is that the United States’ and OECD’s share of global economic activity is in decline. In 2011, the United States alone accounted for 22.7 percent of all global economic activity, and the OECD countries collectively accounted for about two-thirds (64.7%) of the world’s economy.

China (17%) and India’s proportion of the global economy respectively will increase from 17 percent and 6.6 percent today to 27.8 percent and 18.2 percent of the global economy by 2060. Economic growth in the developing world will outpace that of the developed world, such that by 2060 the United States’ share of the global economy will have declined to 16.3 percent, and the OECD’s collective share will have declined to 42.3 percent.

The data are interesting, but we need to pause and think about what they actually mean. A couple of issues emerge.

First, as liberal political economy tells us, economic growth is not a zero-sum game. The developing world’s rising share of the global economy has not been at the expense of the developed world’s economy over the past forty years. Rather, as the “economic pie” has grown larger, countries like China and India have been able to capture a larger portion of the economic growth.

But the changing structure of the global economy does raise other issues which are more zero-sum.

Economic growth in the developing world raises concerns over access to non-renewable resources like coal, oil, and rare earth minerals. Already competition over minerals between the United States and China has led China to restrict exports. Further, competition between China and the United States for access to non-renewable resources has escalated. As other countries enter the fray, demand for such resources is likely to intensify.

Additionally, the nature of economic growth may give reason for pause. Historically, economic growth has been a highly polluting affair. The environmental Kuznet’s curve suggests that pollution increases with economic growth until a country reaches a particular level of development, after which protective regulations are imposed and the environment begins to improve. In this respect, China’s pattern of economic growth echoes the pattern established by Great Britain, the United States, Germany, and other developed nations as they industrialized. But the prospect of expanded pollution, dramatic growth in carbon emissions, widespread deforestation, and so on raise concerns about the sustainability of economic growth that are not addressed in the OECD report.

What do you think? Does the OECD forecast give reason for concern? Or is it merely part of a continuing trend of economic growth in the world? Take the poll or leave a comment below and let us know.

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2 responses to “A Look Forward in the Global Economy

  1. The US has a bigger economy than the EU? not according to wikipedia;)
    http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

    • worldpoliticsblog

      Thanks for your feedback! Yes, taken collectively the European Union’s economy is larger than the US economy. But the OECD data are looking only at individual country economies, not the collective economy of the European Union.

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