Rise of Asia: Will GDP do the talking?

The trend is now backed by numbers, as revealed by the European Report on Development

 
By Amit Baruah
Last Updated: Sunday 07 June 2015

The trend is now backed by numbers, as revealed by the European Report on Development

Terms like the “rise of the rest” or the “Asian Century”, which sound good in leaders’ speeches, are now facts that are hard to ignore and will lead to considerable global re-adjustment in the years to come.

Assessing different scenarios, the European Report on Development 2013, argues that in the main scenario, China and India will double their global GDP shares by 2030—to 18 per cent and 5 per cent of the world economy.

In the same period, GDP in the European Union will drop from 29 per cent to 22 per cent, the United States from 26 per cent to 23 per cent and Japan from 9 per cent to 7 per cent.

“These forecasts suggest that the share of world GDP accruing overall to less developed countries will increase from 45 per cent in 1990 to nearly 70 per cent in 2030...In fact, six economies—Brazil, China, India, Indonesia, Russia and South Korea—are expected to account for over half of the world’s GDP growth by 2025,” the report says.

By 2030, two-third of the world’s middle-class will be living in the Asia-Pacific region, fuelled by the growth in this region—a projected increase in absolute numbers from 500 million to 3.2 billion.

In parallel, Europe’s share of the middle-class will decline from 36 per cent to 14 per cent and North America’s from 18 per cent to 7 per cent by 2030.
 
“This emerging middle class will have significant implications for global demand...it is projected that middle-class (real) purchasing power in the Asia-Pacific region will increase from $5 billion to $32.6 billion by 2030, dwarfing that of North America ($5.8 billion) and Europe ($11.3 billion),”  the 2013 report states. 

It’s also evident that the share of Asian exports will continue to rise in line with the statistics already presented.

“The volume of international trade and capital flows is expected to increase, suggesting a more interdependent global economy, although the geographical patterns are likely to change significantly, with a particularly strong increase in South-South economic relations,” the report continues.

Grim prognosis for employment

The inevitable projected shift in global economic power isn’t leading to any good news on the employment front. Global unemployment, which rose to 6.1 per cent in 2010, is expected to remain at that level till 2016.

“It is also estimated that the global economy will need to create 400 million jobs by 2023 in order to halt the rise of unemployment, let alone reduce it,” says the report.

With statistics laying bare the extent of the power shift in the world, it’s likely that the North will want to shift the burden of responsibility to the South on a range of global issues.
They will increasingly argue that economic power no longer lies with the developed world and the developing countries should do their bit in fixing global problems.

Already, reports coming from the Warsaw round of climate change negotiations suggest that the developed world has already started taking such positions.
 
We can expect more of the same in the future.
 
Past actions can't be wiped out

The new positions being taken by the North are clearly an effort to redraw global rules on development and climate change issues and bury any residual colonial guilt that might have persisted all these years.

“The fast-growing middle class in emerging economies will lead to significant changes in consumption patterns, including a shift towards a more meat-intensive diet...meat production is extremely resource intensive, notably in terms of land and water, and significantly contributes to CO2 emissions,” the European report adds.
 
It’s clear that the issue of responsibility is going to become increasingly important as the power shift away from the developed world becomes more pronounced.

At the same time, the issue of (historical) responsibility cannot be brushed under the carpet or consigned to history.

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