2013 is a pivotal year for where we have Economic Growth

by Jörgen Eriksson on June 5, 2013

World Economic GrowthWhether a nation be today mighty and rich or not depends not on the abundance or security of its power and riches, but principally on whether its neighbours possess more or less of it.” – Phillipp von Hornigk, writing in Prussia in 1684

The quote above is worth to consider. It was written in a much earlier age than our modern times, but it anchored a firm principle of how dominance between nations, companies or individuals tends to be a zero-sum game.

Historically arms and armies have asserted the dominance of nations, but then as now, the factor that allows for creation of power is economic output, and the measure for how relative power changes is the factor of economic growth.

There was an article in Financial Times Tuesday June 4th, with an interesting graph about Economic growth. The article claimed that 2013 is pivotal year for the balance of the global economy.

In 2013, for the first time since the the industrial revolution in the 19th century, emerging economies will produce the majority of the world’s goods and services.

Chinese wallThe new dominant nation is, of course, China, returning to its historic role as world economic leader. However in the ancient world this did not matter so much in global influence as trade was limited.

In the modern world with a global economy and hyper competitive markets, in the zero sum game of world power, Chinas future influence may be profound.

China had the longest continually recorded nation history in the pre-modern world and for a very long time until the mid 19th century, China dominated the aggregated world economy. Not even the historical outbreaks of plague, which originated in and hit China the hardest, changed this balance.

It took a thousand years for the world’s economic centre of gravity to shift from Asia to Europe culminating with the industrial revolution. But now that trend is reversing itself, and at a stunning speed.

Now in 2013 the one billion inhabitants of the rich, advanced economies in Europe and North America represents only 15% of the current world population of 7 billion. By now, the rich world is less economically important than the mass of people living in the world’s rapidly developing poor and middle-income countries where high economic growth quickly increases both supply and demand of goods and services.

Financial Times - 2013-06-04 - World Economic GrowthThe centre of power that took 1000 years to travel west will have travelled all the way back east in a matter of a few decades.

The shift in the balance of global economic power is profound. It is also a trend that economists expect to continue. By 2018, the International Monetary Fund projects emerging markets’ share of world output will have risen to 55 per cent, making the term “emerging” increasingly irrelevant.

Click on the link below to download an illustration from the from Financial Times article. 

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