Danny Quah of LSE has a new article “The Global Economy’s Shifting Centre of Gravity“. Here’s the shift, where black dots denote the easterly shift that has already happened 1980-207, and red dots the projected shift 2010-2049:
The future shift extrapolates current trends. This is iffy given how individual country growth is mean-reverting, but I will leave that for another day.
If the Economy indeed continued East this way, is this really bad for the West? Professor Quah does not address this in the article, but of course the question begs asking.
The answer is: Of course not. Economic growth is not an elimination tournament like the current NCAA basketball madness, where one team wins and the other goes home. When a previously poor part of the world gets richer, everybody wins.
Temporarily and illegimately assuming the role of official spokesman for the West, here’s our view: the richer are our trading partners, other things equal, the more demand for our products, the more and better jobs created thereby, the more gains from trade, the more innovation as the extent of the world market grows, and the more we can benefit from the additional human capital and innovation happening in the East.
And then temporarily and illegimately becoming development spokesman: higher growth in the poorer East means catching up to the richer West. Isn’t that what we always wanted?
In sum, what’s not to like?
Originally published at Aid Watch and reproduced here with permission.