Saturday, May 7, 2011

More Charts - GDP Shares 1990-2016

Here are some more charts to ponder.  These ones are drawn from IMF data, showing various countries/groups percentage of global GDP, first at current dollars, then at purchasing power parity (PPP) from 1990 to 2016 (IMF forecasts after 2010).

The charts show the declining share of world GDP of the advanced economies (83% 1990, 63% today, 58% projected 2016), the Euro area (25, 19, 16), and the U.S. (27, 23, 20).  In contrast the BRICs (5, 18, 22), emerging Asia (5, 15, 19), and particularly China (1.8, 9.5, 12.4) are on the rise.  You'll note that China's numbers certainly don't come close to America's, but the gap has been closed very quickly.  Also, India, one of the BRICs, still lags in the single digit percentages even into mid-decade.

At PPP, the numbers read a little differently, largely owing to the distortions in currency valuations, particularly the Chinese renminbi.  This has the U.S. with a smaller share (24, 19, 17) and China with a significantly larger percentage (3.9, 13.6, 17.99).  The Euro area, too, has a smaller percentage (21, 14.5, 12.4), while the advanced economies as a whole (69.2, 52.3, 46.5) dip below the 50 percentile range by the end of the forecast period.  These are significant statistics that point to the relative decline of both the U.S. and particularly her allies in the face of emerging world powers.  Throughout the period, U.S. GDP has risen significantly on both measures, so the U.S. is not in absolute decline.  Its absolute economic power continues to grow, but the emerging world is closing the gap.

Current dollars



  1. First, I've always been skeptical of the BRICs a bit. Lumping them together might be a fallacy of composition; what do they have in common other than big populations, resource wealth (which can deleterious rather than advantageous, of course, for economic growth), and someone at Goldman Sachs trying to sell securities? I'm more taken by Mancur Olson's "The Rise and Fall of Nations," (not Paul Kennedy's, "The Rise and Fall of the Great Powers"), which essentially argues that nations become economically sclerotic as they grow and interest group politics and rent-seeking become endemic. The cases of sclerotic nations include the US and the UK in the era of stagflation; the cases of nations unencumbered include Japan and Germany, "free" to start anew after World War II. There might be, I suppose, an upper bound or limit to a nation's wealth production - absolute (totally sclerotic) and relative (newer nations that are less less sclerotic overtake older nations. Right now, I don't think Olson's ideas really apply to BRICs and their peers (e.g., Indonesia) - I think they fit advanced industrialized democracies better. Still, there are a few ideas that come to mind. The first, and most important, is that the BRICs are growing because there is more "room" in which to grow. At the same time, though, I wonder what the marginal impact of an additional input into the economy of a BRIC compared to, say, the US is. If one accepts that economic growth depends on economic and political institutions - e.g., property rights - and factor endowments - e.g., land, labor and capital - then BRICs might code as lower on one - economic and political institutions and higher on factor endowments. Perhaps as the marginal benefit of utilization of factor endowment declines, then the real impact of additional units will depend on economic and political institutions. For the moment, though, and apologies if this doesn't follow directly from what preceded, what I'm trying to say is: what are the limits on absolute and relative wealth for the BRICs? Second, more basically, only two of the four BRICs, so far as I know, are democracies. China is not and Russian democracy is, so far as I know, in a state of retrenchment rather than expansion. Nor are, I imagine, the political risk ratings for Brazil and India particularly enviable. At some point, if growth continues, and a middle class expands in Russia and China, there is going to be revolutionary potential as the mismatch between a desire for political participation and political institutions becomes more marked (Huntington, "Political Order"). This holds, at least, for China, and perhaps as well for Russia (a kleptocratic crony capitalist state ruled by a few at most, is my impression). Moreover, it is unclear to me what the prospects are for Brazil and India. Could one expect to see social unrest in either? It seems possible to me, although I'm not enough of a SME to comment intelligently on any four of the BRICs, including those two. Once more, though, as with my first point, what I am trying to say is that there may be substantial limits to relative and absolute share of world GDP for the BRICs. Their factor endowments will be subject to the laws of diminishing marginal utility and the economic and political institutions needed for economic growth are lacking. Moreover, one needs to be cognizant of non-linearity, or, if one wants to be linear in the modernization vein, the possibility of substantial upheaval on the order of a revolution.


  2. There is nothing that makes the BRICs the BRICs except that they are starting to group together a bit, as evinced by the Sanya Declaration, which came out of a summit they just had to discuss their BRICness.