21st Century wealth diffusion: geography, population growth, market-size
The February 2017 report of PricewaterhouseCoopers (PwCs) Top-30 country projections repeats a theme earlier visited in Scopus (January 03, 2017) - of the tables of global wealth inverting, placing hitherto developing countries higher up the ladder and their developed counterparts lower than currently. To be sure, the inter-change at the top two positions exemplifies the broader trend of Asian countries nudging their North Atlantic counterparts from the upper echelons: the top-of-the-league US figure of having the largest GDP (gross domestic product) of $18.56 trillion today will increase to $23.48 trillion in 2030, but the country is expected to dip to second place behind China's projected $38.01 trillion in 2030, itself more than tripling the $11.39 trillion it registered in 2016.
For a better understanding, we should compare the PWC 2030 projections to what may be called the 2016 "projections" (these figures need a little bit of time to anchor themselves, since typical frictional adjustments continue for 2 or 3 years after the year reported). Accordingly, 18 countries in today's Top-30 will decline in rank positions and 11 expand. Among countries whose positions (not wealth) have declined the most are the Netherlands, from 17th ($.77 trillion) to 32nd ($1.08 trillion), and Australia, from 13th ($1.26 trillion) to 23rd ($1.66 trillion), with Canada slipping from 10th ($1.53 trillion) to 18th ($2.14 trillion), Italy, from 8th ($1.85 trillion) to 15th ($2.54 trillion), and Argentina, from 21st ($.54 trillion) to 27th ($1.342 trillion), following suit. Likewise, the countries climbing in the rankings, from the highest position change, include Pakistan, from 41st ($.28 trillion) to 20th ($1.87), Vietnam, from 48th ($.2 trillion) to 29th ($1.3 trillion), Bangladesh, from 46th ($.23 trillion) to 28th ($1.32), Malaysia, from 38th ($.3 trillion) to 25th ($1.51 trillion), Egypt, from 32nd ($.35 trillion) to 19th ($2.05 trillion), the Philippines, from 36th ($.31 trillion) to 24th ($1.62 trillion), and South Africa, from 42nd ($.28 trillion) to 30th ($1.45 trillion). Note how all the climbers here have double-digit position climbs (they climbed more than ten spots), but decliners only managed 2 double-digit climbers. Any long-term continuation would suggest the damage depicted may not be easily and inexpensively reversed.
Of course, every country, whether position decliners or climbers, registered a GDP volume growth: it is just that, in a relative context, position impacts depict a worse condition than might actually be the case. Unfortunately, rankings are the stuff that "news" is made of.
Behind the position-based ranking hoopla, other noteworthy features beg attention. For example, the geography at stake, the population size, economic philosophy, and a combination of all of the above.
Turning to geography first, the oft-whispered 21st Century European twilight argument is further strengthened by these statistics: its power-house, Germany, dipped from the 4th largest ($3.49 trillion) to the 7th ($4.7 trillion), followed by similar declines of the United Kingdom, from 5th ($2.65 trillion) to 10th ($3.64 trillion), France, from 6th ($2.49 trillion) to 11th ($3.38 trillion), Spain, from 14th ($1.25 trillion) to 17th ($2.16 trillion), and Poland, from 25th ($.54 trillion) to 26th ($1.5 trillion). Note the growth in absolute wealth. Only Russia from that continent registered an increase in the Top-30, from 12th ($1.26 trillion) to 6th ($4.74 trillion).
The simultaneous postulation of emerging countries lying in Asia gets further resonance. In addition to those already mentioned, India moves from 7th ($2.25 trillion) to 3rd ($19.51 trillion), Turkey, from 18th ($.73 trillion) to 12th ($2.99 trillion), and Thailand, from 28th ($.39 trillion) to 22nd ($1.73 trillion), while Japan is most notable among the decliners, from 3rd ($4.73 trillion) to 4th ($5.60 trillion), even with an expansion in absolute wealth. Brazil, Mexico, and particularly, Colombia keep Latin America flying high - Colombia rising from 43rd ($2.7 trillion) to 31st ($1.11 trillion), and Mexico from 15th ($1.41 trillion) to 9th ($3.67 trillion). African success stories lie with Egypt (already mentioned), Nigeria, from 26th ($.42 trillion) to 21st ($1.79 trillion), and South Africa (already mentioned).
Geographically, then, globally diffusing wealth actually means higher growth-rate possibilities in areas of lower relative development than in higher, but clearly proposing expanded (a) global trade, and (b) local economies.
This second factor raises the importance of population. The more the population, the larger the market, and the better the economic size-ranking. No wonder the top-12 PWC countries have more than 50 million people, while in the next 18, at least 10 of them have similar number of people. Clearly, this is not a list Switzerland, for example, might be interested in (with a ranking outside the box), but it remains one of the top developed countries, as too New Zealand, Norway, Sweden, and the like. Yet, their lower population growth-rate might do them in, if not in absolute terms (it generally requires 3 working people to finance 1 person on pension), than relatively, releasing a demographic time-bomb that only unthinkable immigration or subsidized baby-boosting plans could offset. For the younger African, Asian, and Latin population, this is more a long-term concern than immediate, with the exception of China and Japan in Asia, and Mexico in Latin America: China's one-child policy hastened this plight, but, like Japan and Mexico, the pace of development might have released it anyway.
Clearly the population size is profiting from the market philosophy of the moment, irrespective of Malthusian dicta. Unlike Thomas Malthus's prediction of population growth outstripping food supplies, neo-liberal economic philosophy relies, perhaps excessively, on market-size: not only the more people the merrier, but the more material goods one has, seemingly the higher that person's income (or economic) ranking/profile. In short, consumption rules the market. No economic philosophy has embraced this better than neo-liberalism. It actually refines Walt Whitman Rostow's fifth and final stage of economic development, what he called high-mass consumption: only the mass consumption he had in mind stemmed from mature development, which needs not necessarily be the case today, since, especially Africa, Asian, and Latin countries in the two lists being assessed also rank very high in the number of people at the poverty line without levels of developmental maturity. This may be the current trade-off: poverty levels do not matter if the net economic size is expanding, a feature the original developed countries would wince at in their own cases (without denying poverty has also increased there as well).
What do geography, population, and market-size mean collectively? In very disparate ways, they all point to declining governance, climbing costs, and the inevitable boom-bust cycle.
Taking geography first, the obvious global diffusion of wealth can only intensify individualistic behaviour over collective (as, for example, regional trading blocs), and if collective at all, not reasons of contiguity. In essence, the evaporation of a well-known arena, say the "Atlantic order," or the European Union, may not be followed by as stable and coherent arenas as the ones we have experienced. The term "spaghetti bowl" has been used to refer to multiple and crisscrossing trade agreements as a successor of "free-trade agreements" of the type built primarily in the 1990s. More wealth with less stability and less predictability is a recipe for more unknown occurrences than known.
Population growth to boost sales similarly brings in more warts and worries than embellishments and enhancements. The attention shifts from the welfare of each individual to the individual as an instrument of the market, a location historically less well-managed as the number of consumers grows than otherwise. Since much of the population growth is expected to be in newer geographical areas than previously, the likelihood of greater instability logically suggests the developing world. However, if we bring back demographic trends into the equation, even developed countries also face a time-bomb. In other words, the Malthusian fear seems more real now than ever before, but not for reasons he postulated. Calls for effective governance will grow commensurately.
Finally, with market-size as the be-all and end-all consideration of life in the early 21st Century, we may be summoning a boom-bust cycle of increasingly wider range. Linear economic growth has rarely, if ever, characterised any single country, let alone a swathe of countries simultaneously for too long. Besides, there has always been tension between market-friendly and market-loathing forces, nationally, regionally, and globally: it both feeds into the unavoidable capital-labour dichotomy and the developed-developing mindset that impinges policy-making. In other words, it is virtually impossible to expand markets everywhere without expanding consumers or purchasing power; and in a competitive market, that has not historically happened. Here, too, the need for governance grows each time there is a hiccup (downturn, recession, or depression).
Ultimately, the trade-off is between lifting more people off the economic floor and cultivating selective wealth islands: not everyone will be lifted off that floor, just as the shine of being a developed country may also lose its lustre.
Dr. Imtiaz A. Hussain is Professor & Head of the newly-built Department of Global Studies & Governance at Independent University, Bangladesh.