The 21st century has been dominated with discussions and concerns about a major paradigm shift in the world: the rise of so-called developing countries. It’s pretty much become accepted that poorer, comparatively under-developed nations – chief among them China, India, Brazil, and maybe Russia – will soon reach a level of wealth and industrialization long characteristic of North America, Western Europe, East Asia, Australia, and New Zealand. The modernization and prosperity gap between the developing world and developed countries (as rich nations are called) is quickly narrowing, with vast political, social, cultural, and economic implications for the world.
The Economist recently published a brief but detailed report about this increasing shift in power and fortune for emerging economies (as they’re also called). One version is heavier on the info-graphics – linked here – while the other is more wordy and analytical, and linked to here. For practicality’s sake, I’ll post some of the data here, as it pretty much speaks for itself.
Essentially, developing economies still have some ways to go in terms of attaining the “mature” characteristics of an advanced economy, such as more outward investment, consumer spending, and large companies. But by and large, they’ve not only caught up with the rich world in many ways, but seem poised to surpass it rather quickly. As the Economist article notes:
The combined output of the developing economies accounted for 38% of world GDP (at market exchange rates) in 2010, twice its share in 1990 (see upper chart). On reasonable assumptions, it could exceed the developed world’s within seven years. If GDP is instead measured at purchasing-power parity, which takes account of the fact that lower prices in poorer countries boost real spending power, emerging economies overtook the developed world in 2008 and are likely to reach 54% of world GDP this year. Even more impressive, they accounted for three-quarters of global real GDP growth over the past decade.
So momentum and recent historical precedent are clearly in the emerging world’s favor. Granted, the future is always a difficult thing to predict, especially when it comes to economics (as we’ve grown painfully aware of these past few years). But barring some gigantic global catastrophe, we can expect to see a lot of new countries join the stagnant ranks of the industrialized world, if not officially, than at least as far as the quantitative measures go. Even another economic crisis might not be too troubling: most of today’s developing nations were among the first to emerge from the punishing global recession, and were far less harmed by it than their richer rivals. As the article poignantly notes:
Two decades ago economic models treated the developing world like a dog’s tail, wagged this way and that by rich countries but too small to affect them. Now the tail wags the dog. Their greater weight and speed mean emerging markets drive global growth, commodity prices and inflation.
These emerging powers will no doubt be more than happy to exercise that sort of influence, which they’ve long had to face from richer nations. However, I don’t want to overstate the implications of any of this. Again, the developing world still has a long way to go, and it will likely take decades for most of them to reach the level of development that we’re accustomed to. Economic growth doesn’t account for political and social progress either: China and Russia may still be corrupt and authoritarian, while India may still contend with ethnic, religious, and political tensions.
There’s a lot to be concerned about regarding the costs to the environment and labor rights: what will a world with billions of new and increasingly demanding consumers be like? Will there be enough resources and land for all of them? Can the world take any more waste and pollution from all the new industries and goods that are proliferating? How much logging, mining, and clearing for farms can our planet take? And what will happen to the vast underclass of workers that will be expected to extract and make all the resources needed?
More people having access to food, shelter, healthcare, and education is a good thing, but how sustainable will it be, and at what costs will it come? I’ts perverse to think that the long-suffering majority of this planet must be questioned in its growing prosperity due to unfortunate timing. But if the rest of the world came to live more like Americans, we’d have a lot of scarcity on our hands, as even current levels of consumption are being increasingly difficult to maintain.
Thus, this “rise of the rest,” as Parag Khanna, an international relations expert puts it, will present vast challenges to a fragile but increasingly dynamic world. One could only hope that the growing clout, wealth, and education levels of these nations could constructively be applied to address these concerns before they bring us all down.