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World Economy Taking New Shape

 InDepth News 21 June 2019

The biggest economic story of our times is unfolding itself. In the new economic world we live in, countries in Asia, Africa and Latin America are providing the dynamism for future growth. In fact, economic growth in the developing world has outpaced that in advanced economies for more than a decade. Developing countries are set to contribute nearly 60 percent of world GDP (gross domestic product) by 2030. (860 Words) - By Richard Johnson

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Non-OECD countries, which do not belong to the traditional category of rich industrial economies, give over 100 times more aid to developing countries than they did in 1990.

China once accounted for over one-third of global poverty; now it accounts for less than one-sixth. In 2009, China became the leading trade partner of Brazil, South Africa and India, and is set to surpass Germany as the world's largest trading nation in 2010.

These are some of the highlights of a new publication from the Development Centre of the Organisation for Economic Co-operation and Development (OECD).

The '2010 Perspectives on Global Development: Shifting Wealth' looks at the major realignment of the global economy that has taken place in the previous two decades. Economic and political power has been shifting towards the developing world and emerging economies thanks to high and sustained growth rates in large developing countries, particularly the Asian giants of China and India.

Increasing links between developing countries has been a feature of this transformation: flows of trade, aid and investment between developing countries have all intensified.

Which countries have had the most rapid growth? How does the rise of the Asian giants affect the global economy and the rest of the developing world? And how can poor countries take advantage of the new economic landscape?

'Shifting Wealth', the first edition of Perspectives on Global Development, launched in Paris on June 16 June 2019 by OECD Secretary General Angel Gurría, answers some of these questions, and provides insights.

"It shows how this shift in the economic centre of gravity is cause for optimism, rather than consternation," says Alan Hirsch, Deputy Director General and Deputy Head of the Policy Unit in the South African Presidency
According to the publication, the economic and financial crisis is accelerating this longer-term structural transformation in the global economy. Longer-term forecasts suggest that today's developing and emerging countries are likely to account for nearly 60 percent of world GDP by 2030.
While the 1990s was a lost decade for much of the developing world, growth rates picked up significantly in the 2000s, with the number of developing countries beginning to converge strongly with the affluent OECD countries leaping from 12 to 65.

The strong performance of China and India has had a significant impact on the rest of the developing world.

Responding to this trend, the OECD has set out to strengthen its relations with major emerging economies. It has strengthened its links with Brazil, China, India, Indonesia and South Africa. Recently the "rich man's club" welcomed Chile as its 31st member. It has extended to Estonia, Israel and Slovenia invitations to join. Russia is also negotiating to become a member.

IN CONVERGING COUNTRIES

Since 1990, the number of people in the world living on less than a dollar-a-day has fallen by over one quarter -- approximately 500 million. So far, however, these reductions have mainly been concentrated in one country -- China.

Other countries have made progress but at a pace insufficient to counter the effect of population growth. Poverty reduction still represents a major challenge for the developing world. Inequality in many rapidly growing developing economies has also been increasing.

"Thanks to the rapid growth rates in emerging economies, their governments can now afford to boost public spending on social protection. This is a powerful tool to reduce inequality," said Angel Gurría, Secretary-General of the OECD. "Investing in social infrastructure may also contribute to diminish the propensity to save of these economies, contributing to a more balanced global economy." he added.

IN POOR AND STRUGGLING COUNTRIES

Due to their rapid growth and sheer size, India and China influence the key macroeconomic variables that matter for poor countries: interest rates, the price of raw materials, and wage levels for low-skill jobs. They also have major impacts on global trading and investment patterns, according to the study.

Poor and struggling countries will need national development strategies which respond to these global trends to ensure that they thrive in a global economy in which China and India have greater weight.

The report finds that more could be made of the economic ties between developing countries. "South-South links" in trade, aid and investment are an increasingly important source of knowledge and finance for development.

For example, lowering tariffs on trade between developing nations to the levels that prevail between northern countries would be worth almost double the gains achievable by a similar reduction on North-South trade.

Overall, shifting wealth is good news for development and good news for the global economy. "Growth in the developing world is an opportunity for the global economy to shift up a gear, which is confirmed by the role some emerging economies are playing in the current economic recovery", Gurría commented.

 

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Originally published by InDepth News. © www.streetnewsservice.org

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