Beyond the Beyond, weblog of science fiction and technology-in-society writer Bruce Sterling, referenced a CITI Financial report (no link found yet), summarized by Indian news portal Rediff, that claimed India would become the world’s largest economy by 2050.
“China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050,” financial services group Citi said the report.
The estimates are based on Purchasing Power Parity (PPP), an economic growth indicator that takes into account the purchasing power of each country’s currency, instead of the prevailing exchange rate conversion.
Indian economy is expected to be nearly $85.97 trillion on PPP basis by 2050 from $3.92 trillion in 2010, Citi said.
Going by the report, India would surpass the US — currently the world’s largest economy — to become the second largest by 2040.
“We expect India to overtake Japan to become the third largest economy in the world by 2015,” it noted.
The ranking of the top 10?
1. India: $85.97 trillion
2. China: $80.02 trillion
3. United States: $39.07 trillion
4. Indonesia: $13.93 trillion
5. Brazil: $11.58 trillion
6. Nigeria: $9.51 trillion
7. Russia: $7.77 trillion
8. Mexico: $6.57 trillion
9. Japan: $6.48 trillion
10. Egypt: $6.02 trillion.
On the face of it, these precise predictions–accurate to the nearest ten billion, no less!–are ridiculous. The report does identify reasonably plausible prospects for growth and suggest that sustained, highly specific, and actually implemented policies would take these countries to their destined wealth, assuming that all goes well and uninterrupted by any surprises internal or external. I admit to being pleased by these predictions, since I’m a booster of Indonesia particularly but Brazil as well. (“If,” as the Spartan king said to the Persian ambassador.) Treating this as anything but an interesting jeu d’esprit, a thought experiment of some little worth, isn’t a good idea on account of the horizons being so distant in time.
But still, the horizons are tempting enough to make people grasp onto these as firm projections. Sterling’s right to note that these predictions were popular among Indian nationalists, who want to believe that their country will acquire superpower status on its own. Others, too, like the Wall Street Journal Stephen Fidler in his blog post “Growth Forecasts for 2050 Should Open Europe’s Eyes”, go at it from the other end.
At the other end of the growth telescope: a lot of European economies. Spain is forecast to be the slowest-growth economy in the world over the years to 2015, with per-capita purchasing power declining slightly.
Also on the list of laggards: Austria, Switzerland, Belgium, Sweden, France and Italy. Pretty much the same band is on the laggards’ list over the 20- and 40-year horizons.
Western Europe accounted for 28% of global economic output in 1950 and in 1970. By 1990, this had fallen to 24% and stands at 19% today.
The Citigroup forecast suggests it will shrink to 11% by 2030 and 7% by 2050—a smaller share either than Africa or Latin America.
By 2050, “developing Asia” will account for 49% of global GDP. (Central and Eastern Europe’s share, which has stayed at a consistent 4% of world GDP since 1950, is forecast to shrink to 3% in 2030 and 2% by 2050.)
In 2010, Europe has four representatives among the top 10 world economies, occupying fourth to seventh place: Germany, France, the U.K., and Italy. By 2020, Italy drops out. By 2040, France drops out and by 2050, Germany drops out.
Europe’s declining share of global GDP is inevitable: European populations are stable, western Europe lacks the potential for rapid catch-up growth given that it’s already at the bleeding edge of the world economy. Central and eastern Europe will hopefully converge towards western European levels of GDP per capita over the next few decades, although the expected contraction of populations across that region may hinder this (and further diminish the region’s share of world GDP). There are no plausible policy recommendations, barring remarkable breakthroughs in economic theory or material production, that could keep Europe’s share of global GDP from declining: Europe just can’t keep the rest of the world from succeeding, even if Europeans wanted to. This relative decline in shares of global GDP won’t translate, importantly, to GDP per capita, as Fidler acknowledges: “It is perhaps possible, however, to draw comfort from one of the other conclusions of the report. Despite the rapid growth elsewhere, Japan, North America and Western Europe will remain the world’s most affluent regions in 2030 and 2050.”
But despite this acknowledgement, perhaps because of the particular ideological bent of the Wall Street Journal, perhaps not, this plausible-seeming but not-inevitable scenario is used to criticize Europe for not doing the impossible.
Consider this another piece of evidence for the contention that futures are political.