By Christian Fleming
Mar. 25 – An article written and released earlier this year by London School of Economics Professor Danny Quah is getting a lot of attention recently by quantitatively illustrating how the global economy’s center of gravity is gradually shifting eastwards towards India and China.
By calculating the average location of economic activity across geographies on Earth since 1980 and projecting it forward to 2049, Quah’s “The Global Economy’s Shifting Center of Gravity” shows that China and India are slowly moving closer to the positions they held in the 18th Century, when the two nations were responsible for producing roughly 45 percent of the world’s wealth.
“In 1980 the global economy’s center of gravity was mid-Atlantic. By 2008, from the continuing rise of China and the rest of East Asia, that center of gravity had drifted to a location east of Helsinki and Bucharest. Extrapolating growth in almost 700 locations across Earth, this article projects the world’s economic center of gravity to locate by 2050 literally between India and China. Observed from Earth’s surface, that economic center of gravity will shift from its 1980 location 9,300 kilometers or 1.5 times the radius of the planet.”
An animated look at Quah’s results can be seen below, with black dots illustrating the actual economic center of gravity every three years from 1980 to 2007. The red dots represent Quah’s projections from 2010 to 2049.
While some are alarmed by these findings, it is in fact a completely natural trend given that China, India, and ASEAN account for nearly half of the world’s population with a combined 3.13 billion people. Furthermore, a resurgent Asia does not have to come at the expense of the developed world. It is not a zero-sum game whereby Europe and America are suddenly weakened or diminished as Asia gets stronger.
Actually, Western markets like the United States are set to benefit from a wealthier, more prosperous Asia. As 3.13 billion people continue to see increases in their disposable income, demand and consumption of Western products will rise – thereby creating both wealth and jobs. Furthermore, as the cost of doing business in Asia continues to rise and profit margins shrink, outsourced manufacturing will start to come back to local markets.
To illustrate this development, the United States is on track to export more than US$100 billion worth of goods and services to China this year alone, according to U.S. Treasury Secretary Timothy Geithner.
“Our exports to China are growing at twice the rate of our exports to the rest of the world,” he said. “We have a great deal invested in each other’s success.”
That map actually showing the centre moving into China proper.
As it is there another report on Indian corruption is correct, foreign investors are unlikely to return there in huge numbers anytime soon.
http://gulfnews.com/business/features/india-s-corruption-not-just-a-distraction-but-a-real-threat-1.782369
That report also mentioned something about British companies not being paid for work they did for the 2010 Commonwealth Games in India last. Well there are also Australian companies that haven’t being paid yet as well. That leads to the question of whose pockets did the money the Indian government allocated for works and preparation go into?
I dont know who this prof is, but most analysts know about this thing for quite some time.
@Observer:
I am happy that India is going through this patch. Its a cleansing operation and the outcome will be much better. I hope that the Govt/people are able to form laws that can stop mass-looting of national resources.
I wish same thing could be done in China too. That would be good for the people there. Do you think there is no “massive-level” corruption in China? Think again. Till 4 months ago…India was comparatively clean and its industry leaders + politicians were pretty clean too
About investors: There is absolutely ZERO concerns about that. It is a positive sign that the country is trying to move forward towards a “less-corrupt” system.
Corruption getting highlighted is the first step for making a corruption free society. It is sad to hear any corruption case but at the same time it is good to understand that the corrupt were not able to hide their corruption. It clearly means that force against corruption is increasing and will finally overcome it. Every developed country had that phase where the corruption was at peak and then started improving. India is just passing that phase.
Also it is important to highlight that democracy does provide the mechanism to highlight the corruption where in authoritarian regime, it is very very difficult, at least for the public & media.
@Deek and Girish
There are democracies AND there are democracies. A population needs to be educated and possess information that will allow them to make an informed vote. Institutions such as the legislature, executive, judiciary, police and the press have to work and not just exist for the benefit of the few. I would agree that India has a free press, but the poor and the minorities in India can’t read. As for the other institutions in India I mentioned, they are notoriously bad and/or slow.
In contrast see an article that talks about China’s growth while showing that income inequality is better than the other BRICs:
http://seekingalpha.com/article/260286-china-s-remarkable-growth
@The_Observer Says
I think you are not incorporating the fact that population cannnot be made educated in a days or months. It is a long process specially when you talk about poor and huge coungtry like India. As I agree with the fact that educated population is the baseline for currution free society but I belive you would agree that percentage of educated people in India are increasing and not decreasing.
Also if you talk about minoraties, the situation is not as bad as being potrated. No one denied the minoraty to take admission into education or public or private jobs. Infact minoraties except Muslims community are better of in India and I believe it has more to do with believes and familiy teaching/priorities in life.
Also elections in Bihar has proved that awareness about good and curruption free governance amoung peoploe is growing and getting stronger with each passing day.
I can see positive days have just began. Just give 15 more years and you will see must must better India.
@Deek
Also there is no point of China India comparison on statistic, as Chinese are ahead of India, thanks to their earlier economic libralization and quick decision making establishment. Important point is that both the countires is growing with each passing day and situation is and standard of living are improving in both countris within their capabilities.
for present day China. But let me tell you, India will be must ahead of present day China in next 14 years.
Todays China is build in last 33 years where as India is only 19 years. I guess you must give 14 more years to India
@Girish:
Did I compare India and China in my earlier comment?
Oh! my apologies
The reply was for @The_Observer
However at least in India the corruption is more often exposed through media and other watchdogs. The GWG issues are already under investigation. I suspect the amount of corruption in China is equally if not more staggering than the nasty levels we see in India, its just that the Communist Party prefer to cover it up. – Chris