Transcript Structural Transformation of the Global Economy

Structural Transformation of the
Global Economy
Implications of Global Power Shifts
Amar Bhattacharya
G-24 Secretariat
Eurodad/Glopolis International Conference
Prague, June 4, 2013
Overview
1. Structural transformation in the global
economy
2. Implications of changing power dynamics
2
Overview
1. Structural transformation in the global
economy
2. Implications of changing power dynamics
3
Structural Transformation
 World Economy at a point of structural transformation
in the relationship and position between developed and
developing countries
 Change has been highlighted and accentuated by the
crisis but had started well before
 For almost 60 years developing country growth tracked
that of developed countries and with depreciating
countries led to growing divergence
 During the past decade there has been a structural
decoupling even though there are strong cyclical links
4
Growth in EMDCs has consistently
outpaced AEs for decades
Source: G-24 calculations based on data from World Economic Outlook, IMF and World Development Indicators, World Bank
5
This trend is evident in G-24 countries,
especially when GDP is weighted
Per-Capita GDP Growth Trend 1960-2012
Per-Capita GDP Growth 1960-2012
10.0
8.0
(Hodrick-Prescott Filter)
G-24 Simple Average
High Inc. OECD - GDP Weighted
G-24 GDP Weighted
7.0
6.0
6.0
5.0
4.0
4.0
G-24 Simple Average
High Inc. OECD -GDP Weighted
G-24 GDP Weighted
3.0
2.0
2.0
1.0
0.0
-4.0
-1.0
-6.0
-2.0
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
-2.0
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
0.0
Source: Canuto (2013), World Bank Poverty Reduction and Economic Management Department
6
Structural Transformation
 Not a story of China and India or of a few emerging markets and
developing countries
 Prior to crisis, 94 EMDCs recorded growth in excess of 5 percent
per annum and 90 percent of EMDCs grew faster than the average
of AEs
 Trend will be continued; although average growth of both AEs and
EMDCs lower than before the crisis, differential will be sustained
 Particularly striking that low income countries and SSA are part of
this trend
 Underpinning this impressive growth has been a virtuous cycle of
rising savings and investment, growing trade and macroeconomic
resilience
7
Increasing Number of EMDCs are on
path to convergence
Dispersion of Average Growth
100
90
80
Number of countries
70
60
50
94
40
30
62
45
20
10
63
58
56
44
33
14
19
23
21
11
2
4
0
0
0
0
2003-2008 2009-2012 2013-2015 2003-2008 2009-2012 2013-2015 2003-2008 2009-2012 2013-2015
<2.5%
2.5-5%
<2.5%
>5%
2.5-5%
Advanced Economies
>5%
EMDCs
Source: G-24 calculations based on data from World Economic Outlook Database April 2013, IMF.
8
Income groups are gradually
converging
120
100
80
60
40
20
Number of HIC countries
Number of MICs
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
0
Number of LICs
9
Structural Transformation
 Sustained growth differential between AEs and
EMDCs leading to a profound change in the global
economic landscape with the share of EMDCs in the
global economy measured in PPP terms greater
than that of AEs
 Similar trend between the G7 and the BRICS
reflecting a new rebalancing of power
 Convergence between GDP at market prices and
GDP PPP in contrast to the pre-2000 an important
element of the new story of convergence
10
EMDCs account for increasingly large shares of
global GDP
Share of GDP (Market Prices)
Share of GDP (PPP)
100
100
90
90
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
1980
1990
2000
2005
2010
2015
1980
Advanced Economies
Source: G-24 calculations based on data from World Economic Outlook Database, IMF
1990
2000
2005
2010
2015
EMDCs
11
EMDCs account for increasingly large shares of
global GDP
Share of GDP (Market Prices)
Share of GDP (PPP)
70
60
60
50
50
40
Percent
40
Percent
70
30
30
20
20
10
10
0
0
1980
1990
2000
2010
2015
1980
G7
Source: G-24 calculations based on data from World Economic Outlook Database, IMF
1990
2000
2010
2015
BRICS
12
Growing Convergence Between GDP at
Market Prices and GDP PPP
(Share of EMDCs in Global GDP)
60.00
50.00
40.00
30.00
20.00
10.00
0.00
GDP PPP
Source: World Economic Outlook, IMF
GDP at Market Price
GDP MP w PPP Convergence
13
Growth rates in EMDCs have withstood the
crisis better than those in AEs
8.00
7.00
GDP Growth
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Average 2003-08
Average 2009-12
Advanced Economies
Average 2013-15
EMDCs
14
Source: G-24 calculations based on data from World Economic Outlook, IMF and World Development Indicator, World Bank
Continued, differential growth prospects
between EMDCs and AEs are forecast
500
Real GDP, index 1980=100
450
400
Developing countries
350
300
250
Other highincome countries
200
150
Euro-area
100
50
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
15
Though amongst EMDCs, there is
heterogeneity across regions
10.0
9.0
8.0
Average GDP Growth
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
EAP
ECA
2003-2008
LAC
MENA
2009-2012
South Asia
SSA
2013-2015
16
Source: G-24 calculations based on data from World Economic Outlook, IMF and World Development Indicator, World Bank
Major Challenges to Sustained and
Sustainable Growth
 Infrastructure development and financing
 The jobs crisis and prospects for long-term
employment creation
 Growing income inequality with lagging countries
and growing inequality in both AEs and EMDCs
 Sustainability including climate impact and
resilience also a source of enormous concern
17
Overview
1. Structural transformation in the global
economy
2. Implications of changing power dynamics
18
Implications for Global Governance
• Growing interconnectedness poses new challenges in
global coordination and governance arrangements
• Recent waves of financial crises has underscored
importance of coordination in the economic and
financial sphere but also the inherent challenges of
such coordination
• The new wave of global challenges coincides with
major shifts in relative positions and the role of old
and new powers
19
The global rank of economies has shifted
markedly in the last four decades
GDP (PPP), $Billions
1980
Rank
1990
2000
2015
1
United States 2788
United States 5801
United States 9951
United States 18012
2
Japan
997
Japan
2370
Japan
3256
China
16647
3
Germany
762
Germany
1447
China
3015
India
5930
4
France
537
France
1027
Germany
2144
Japan
5095
5
509
India
1571
Germany
3497
450
Italy
United
Kingdom
976
6
Italy
United
Kingdom
922
1532
Russia
2957
7
Brazil
446
China
910
France
United
Kingdom
1486
2780
8
Mexico
337
Brazil
786
Italy
1404
Brazil
United
Kingdom
9
India
286
India
745
Brazil
1234
France
2438
10
Canada
280
Mexico
612
Russia
1121
Mexico
2055
11
Spain
272
Canada
558
Mexico
1065
Italy
1943
12
China
248
Spain
551
Canada
911
Korea
1897
13
Netherlands 150
Korea
336
Spain
900
Canada
1676
14
Poland
150
Australia
306
Korea
776
Indonesia
1549
15
Australia
146
Turkey
291
Australia
525
Spain
1499
Source: WEO Database, IMF
2572
20
Contributions to World Growth
(percent)
1981 to 1991
1991 to 2001
2001 to 2011
1981 to2011
United States
21.2
26.3
9.6
17.0
Euro Area+ UK
20.6
17.3
6.4
12.6
Japan
11.4
2.4
1.0
3.7
China
8.7
17.9
29.6
21.6
India
4.4
6.5
10.1
7.8
Rest of World
33.8
29.7
43.4
37.3
Source: A. Virmani based on IMF data
IFI governance arrangements have failed to
account for changing economic realities
Evolution in Actual and Calculated IMF Quotas Relative to Weight in Global Economy
Source: G24 calculations based on IMF data
22
With a Persistent Bias Against Poor Countries
1 Defined as EMDCS whose GDP PPP share divided by the 14th General Review Quota share is greater than 1 and not over-represented by more than 25% based on
the current quota formula. 2 PRGT-eligible countries including Zimbabwe.
23
Source: G24 calculations based on IMF data
Trends in GDP PPP and GDP at Market Prices
Sub-Saharan Africa
4.5
Pre-Singapore
4.0
3.5
14th Review Proposed Quota
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2003-2007
2007-2009
2011-2012
GDP PPP
Source: Calculations based on WEO data
2014-2015
2014-2015
compression 0.95
GDP MKT
24
Why Europe Needs to Adjust Its Quota
and Voting Share in the IMF
Post-2010 Quota
Share
2011-2012 GDP
Weight1
Calculated Quota2
United States
17.4
20.0
16.1
Japan
6.5
6.7
6.3
Europe excl CIS
32.8
23.7
34.7
29.4
21.1
30.8
42.3
48.0
42.3
2.7
1.6
1.6
Advanced Europe
EMDCs
Poor Countries
1GDP
2
Blend of 40 percent GDP at market exchange rates and 60 percent at GDP PPP
Based on current formula and 2007-2009 data
Thank you