The world in which our generation lives could be described as an 80/20 world. This ratio reflects the fact that rich countries have roughly 80% of the world’s income, and developing countries 20%.
A tectonic shift is underway, though, and by 2050 the world will be fundamentally different. The share of global GDP enjoyed by today’s rich countries is projected to drop to around 30%, and the share of China, India and other developing countries, such as Brazil, is expected to grow to 70%. This 30/70 ratio world will soon replace the proportion of the 80/20 world.
DEMOGRAPHIC CHANGES ARE EQUALLY DAUNTING
By 2050, the world population is projected to have increased by 3 billion people (from 6 billion to 9 billion), with the overwhelming growth (2.9 billion) in what is now the developing world, and only 100 million in the rich countries. This will bring colossal economic, political and social change.
Indeed, where we once divided the world between rich and developing, we should now consider four distinct categories: “affluents,” today’s rich countries; “globalizers,” countries that are best leveraging the global economy to grow at unprecedented fast rates; “rentiers,” countries that have natural resources but are not growing fast; and finally a set of “survivor” countries that are finding it difficult to integrate into the global economy.
In 2050 the rich world will still be affluent: today’s high-income OECD countries will remain at the top. But “globalizers,” such as India and China, will experience a dramatic shift in terms of economic power and GDP per capita. This will be reflected in changes in the size of the economies – they are projected to have a 60% share of global GDP in 2050. In that year, China and India may have surpassed the United States as the world’s largest economies. Italy, for example, may not be in the top 10, while Indonesia and Vietnam could be.
The “rentier” countries (see box) would have around 6% to 8% of world income. Finally, the “survivors” would remain the poorest countries: today, they house about 1 billion people, a number expected to grow to 2 billion with roughly the same share of the global GDP as present. These people will be left behind, and they will be keenly aware of their plight in a world where information and communication will be even more widely available.
The fate of the poorest countries – the 30 or so countries that constitute these “survivors” – is the real question for the future. For example, whereas GDP in China is projected to grow from about $2,500 to $50,000 a year, income in “survivor” countries is expected to rise from $600 to $1,800 leaving a tremendous number of people mired in poverty.
This is not just a set of figures for statisticians to play a game of projections. It is an issue affecting the very stability of our planet. And alarm bells are ringing. Food riots have recently occurred in many countries indicating that this is not a future challenge, but one affecting millions today. The conclusion is that we are not dealing effectively with poverty. Generally, donor countries and international institutions, including the World Bank, have not done a good job fighting poverty.
Take Africa: at the beginning of the 1990s, aid to Africa was $45 per capita. At the end of the decade, it was down to $36. Aid languished because the economic powers of the OECD simply lost interest until public opinion mobilized to end poverty around the Millennium. In the future, nearly a quarter of the global population will be in Africa and other poorer countries. As the rich world, we simply cannot look confidently ahead towards a comfortable lifestyle or secure pensions without considering how these 2 billion or more people living in poverty will survive and how their plight will affect the stability of our planet.
These are not just the thoughts of an idealist but of a man who fights for a better world. I have a deep concern for my children and for the next generation to come. We urgently need to address the issues of poverty and hunger because of the humanitarian drama involved. Closing our eyes to this matter won’t help at all. The world of the future will be a very different place to be in. It will be a world where “developing countries” will likely be dominant economic powers. It will be a world where the environment will take a greater share of our time and resources, where water and energy provision and politics will have a huge impact. And it will be a world where Africa will continue to have issues that must increasingly be addressed as part of our responsibilities as global citizens.
Rentier states derive all or a significant portion of national revenues from oil or mineral royalties (rent). The economic irony is that many of the poorest and most troubled states have paradoxically the highest levels of natural wealth. In fact, it has been suggested that resource wealth itself, especially where it accounts for the bulk of government revenues, may harm a country’s prospects for development.