Thinking about the Future - the G20 in 2050
Radu Alexandru CUCUTA
January 8, 2010
Radu Alexandru CUCUTA
January 8, 2010
The recent Carnegie Endowment for International Peace Report emphasizes the possible transformations of the international economical environment in the decades to come. The study, based on IMF, PriceWaterhouseCoopers, Goldman Sachs and World Bank estimates tries to paint a picture of the major shifts in economic output the most important 20 nations of the world will be subject to in the next 40 years.
The most important aspect of the study is the caveat of the authors –Bennett Stancil and Uri Dadush. Take for instance their analysis, based mainly on the GDP evolution of the concerned nations, which takes into account the evolution of the labor force in the aforementioned countries, the pace of technological innovation and the rates of both population growth and economic investment. The projections are to hold, according to the authors, if the international market remains open, macroeconomic policies remain “sound” and “no catastrophes occur”. Another assumption of the study is that the G20 will be one of the foremost institutions of the new international economic order (an argument that is highly debatable – although the G20 may grow in importance over the G7 or G8 meetings, for the present being the G20 lacks the credentials, the procedures and the legitimacy of a regulating institution).
The conclusions of the study do not differ significantly from the conclusions of other long/term economical and political assessments, such as NIC’s “Global Trends 2035” - the share of the emerging economies and of the BRIC countries in total GDP output will increase over the next decades, while the Western countries’ share will continue to decrease in relative terms (in spite of maintaining a relatively steady pace of economic growth). Thus, by 2050, China will surpass the USA in terms of GDP output and India will be not far behind. The EU will remain the most important economic actor (thus justifying the authors’ assertion that the EU states need to work together if they are to face the new economic landscape.
However, there are several problems the study does not take into account. On the one hand, the rate of innovation and technological progress is hardly a dynamic variable that can be calculated – both in qualitative and quantitative terms we know very little of what the future has to offer in this regard. Secondly, it is beyond certainty that the international economic crisis was left behind in 2009 – its effects, as a recent WTO estimate points, may still be seen in the next years (if one only takes into account the regulatory modifications the crisis brought forward, then we have to concur that the crisis’ aftermath cannot be judged solely in terms of economic output, but also in terms of new regulatory practices).
Furthermore, the only clear cut political conclusion of the study is that the EU states need to work together if they are to maintain the organization’s world/wide leadership in economic terms. The rest of the conclusions are drawn from the indirect assumption of the authors - that shifts in economic power directly influence the political power of international actors at large, an assertion that is highly debatable. At the same time, there is the social aspect to be considered – a growth that massive (as that the BRIC countries are about to start) leads to impressive and far-reaching social transformation (the rise of inequality between the members of a developing society being a matter of great importance yet to be considered by the authors), that can influence a countries’ foreign policy powerfully, and not necessarily in the direction the numbers point to.
The most important aspect of the study is the caveat of the authors –Bennett Stancil and Uri Dadush. Take for instance their analysis, based mainly on the GDP evolution of the concerned nations, which takes into account the evolution of the labor force in the aforementioned countries, the pace of technological innovation and the rates of both population growth and economic investment. The projections are to hold, according to the authors, if the international market remains open, macroeconomic policies remain “sound” and “no catastrophes occur”. Another assumption of the study is that the G20 will be one of the foremost institutions of the new international economic order (an argument that is highly debatable – although the G20 may grow in importance over the G7 or G8 meetings, for the present being the G20 lacks the credentials, the procedures and the legitimacy of a regulating institution).
The conclusions of the study do not differ significantly from the conclusions of other long/term economical and political assessments, such as NIC’s “Global Trends 2035” - the share of the emerging economies and of the BRIC countries in total GDP output will increase over the next decades, while the Western countries’ share will continue to decrease in relative terms (in spite of maintaining a relatively steady pace of economic growth). Thus, by 2050, China will surpass the USA in terms of GDP output and India will be not far behind. The EU will remain the most important economic actor (thus justifying the authors’ assertion that the EU states need to work together if they are to face the new economic landscape.
However, there are several problems the study does not take into account. On the one hand, the rate of innovation and technological progress is hardly a dynamic variable that can be calculated – both in qualitative and quantitative terms we know very little of what the future has to offer in this regard. Secondly, it is beyond certainty that the international economic crisis was left behind in 2009 – its effects, as a recent WTO estimate points, may still be seen in the next years (if one only takes into account the regulatory modifications the crisis brought forward, then we have to concur that the crisis’ aftermath cannot be judged solely in terms of economic output, but also in terms of new regulatory practices).
Furthermore, the only clear cut political conclusion of the study is that the EU states need to work together if they are to maintain the organization’s world/wide leadership in economic terms. The rest of the conclusions are drawn from the indirect assumption of the authors - that shifts in economic power directly influence the political power of international actors at large, an assertion that is highly debatable. At the same time, there is the social aspect to be considered – a growth that massive (as that the BRIC countries are about to start) leads to impressive and far-reaching social transformation (the rise of inequality between the members of a developing society being a matter of great importance yet to be considered by the authors), that can influence a countries’ foreign policy powerfully, and not necessarily in the direction the numbers point to.
