Monday, August 29, 2005

In 2020, America Will Still Dominate Global Economy

As my readers would know, I'm pretty sure that the USA will remain the dominant global power for a long time to come. The real scramble is for the places behind. I don't think it's impossible that China can become number 2, but most people underestimate the size and number of hurdles China will have to face over the next generation. India's economic growth sounds plausible. India will become a significant global player, but perhaps not a superpower in the true sense of the word. Europe is the sick man of the world, and will until 2020 be fertile ground for riots and extremist political movements, perhaps even war. What is happening in Europe cannot be described as anything less than a civilizational crisis, with collapsing demographics, failed economies and weakening trust between the populace and their political elites. And if we try to fix our shortcomings by increasing immigration, we will get millions of Muslims from neighboring states, who will destabilize our countries even more. It's a dangerous mix, and I'm not sure I can see any short-term solutions to it:

In 2020, America Will Still Dominate Global Economy

What will the world's economy look like in 2020? Combining the theories of growth and analyzing the evolution of development in the 34 principal countries in the world, this study apprehends the principal factors affecting growth and the trends at work today. In 2020, the United States will remain the world superpower, with a total GNP of approximately $17 trillion to $18 trillion. Thanks to its dynamic demographics (1% annual population growth), a productivity and a competitiveness amongst the best in the world (currently second in the world and far out in front of Germany (13th) or France (26th) according to statistics from the World Economic Forum), and thanks also to its constant drive to create and innovate, and with flexibility due to the mobility of its labor force, the United States will maintain a clear advantage over China and India and will widen the gap with Europe. With average per capita salaries of approximately $55,000, the income of the average American in 2020 will be 1.5 to 2 times greater than that of a European; five times higher than that of a Chinese and nine times more than that of an Indian (approximately $6,000 per capita). China will indisputably be the world's second greatest economic power, with a GNP of some $14 trillion, or three times higher than today. That of course assumes that beyond the inevitable short-term risks, no major social crisis interrupts the long-term dynamics: a progressive opening to the outside, an increase in domestic consumption, strong growth - in particular in foreign investment, and the rapid improvement in the qualifications of China's working population (China already has the same number of engineers and technicians as the West, and more than any of the large European countries). Even more than today, China in 2020 will be the industrial workshop of the world. Paradoxically, one of its handicaps will be an aging population, due to the delayed impact of its "one child policy." By 2020, the median age in China will be approximately 40 years, which will be higher than in the United States. The world's third greatest economic power will be India, but far behind the first two, with a GNP of about $7 trillion. If China can be held out as the world's future industrial workshop, India will undoubtedly be one of the great service societies.

In Europe, Germany, France, along with Italy and the United Kingdom, should lose ground in the world competition with a GNP per country of about $2 to 2.5 trillion. While European countries will remain rich in terms of per capita income (about $32,500), their relative weight will decline with their demographics and weaker growth (on average, almost half as much as the United States). I dare say that to overcome Europe's demographic shortcomings in the years to come, it will be necessary for us to lay down and implement a more finely-tuned immigration policy.


At August 29, 2005 1:38 PM, Blogger erp said...

Our treasure is our people. It can't be repeated too often and while it's a simple concept, the rest of the world can't seem to understand it. Ours the model for prosperity.

Many other countries have the same potential. Just look in our own backyard, Mexico and Canada have the same landscape, long coast lines, mountains, mineral deposits, harbors, rivers, fertile farmlands as we, but what's missing is what we Americans have as our birthright.

Our founding fathers gave us the freedom to be individuals, not cogs in the wheel of collectiveness. Are we perfect? Not yet, but we're working on it and we welcome those from around the world who have the "right stuff" as Tom Wolfe put it, to come join our American family.

At August 29, 2005 4:36 PM, Blogger sissyblue said...

And the greatest American was Washington, who when asked to become the King of America after the Revolutionary War, said "No". What a different country it could have been if we had a Napoleon instead of the firm, steady and humble hand of Washington.

At August 29, 2005 6:36 PM, Blogger erp said...

sissyblue, glad you're one of us.


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