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Main Content
The Economic Weight of Developing Countries is About to Overtake the One of Developed Nations
According to a report published on Wednesday 16th June by the Development Centre of the Organization for Economic Cooperation and Development (OECD), we live in the last years of a world economically dominated by a small group of developed countries. Very soon, developing economies should account for the largest share of global economic output (or Global GDP), overtaking then the economic weight of developed economies.
The Paris based institution predicted that in 2010, its 31 developed member countries will account for 51% of the world economic output. But with the rapid growth of China and other developing economies such as Brazil and India, that share has already narrowed from 60% in 2000 and it should shrink further to 43% by 2030. It is interesting to notice that economic growth in the developing world has outpaced growth in advanced economies for more than ten years already.
The OECD does not hesitate to assert that the economic and financial “centre of gravity” of the world is now definitely moving “towards the east and south”, representing “a long-term structural change” for the global economic order.
As a result of the entry of China, India, the former Soviet Union and others in the global market economy from the early 1990’s, the number of nations getting closer to the wealth levels of developed economies has risen from 12 to 65 while the number of countries defined as poor, has fallen from 55 to 25. However, the OECD report said that poverty reduction is still “a major challenge for the developing world” since “inequality in rapidly growing developing economies has also been increasing.”
The impressive and rapid growth of countries such as China and India boosted demand for many commodities, which benefitted producers in other developing countries in Africa, Latin America and the Middle East. That trade and investment links between developing economies - also known as “South-South exchanges”- are growing so rapidly that according to the OECD, this process could be the mainspring to global growth over the coming decade.
The International Monetary Fund (IMF), in a report published on the 1st of June, seems to share this point of view saying that Asia’s economy is likely to overtake the economy of the Group of Seven leading developed countries (G7) by 2030.
Despite the possible worries of the inhabitants of developed countries, this shift of wealth could be good news, not only for them but also for the current richest economies severely impacted by the economic crisis and looking desperately for a sufficient outside growth to boost their exports and consequently increase their own domestic growth.