In last week’s Wall Street Journal, economist David Hale shined a spotlight on a piece of data that some would have thought was still far down the road.
The current business cycle will go down in the history books as one which confirmed that leadership in the global economy is now shifting from the old industrial countries to the emerging market countries. During 2007, the developing countries produced over 52% of global growth, compared to 37% during the late 1990s. China alone produced 17.8% of global GDP growth last year, compared to 14.6% for the U.S. economy. The World Bank is forecasting that the economies of developing countries will grow 7.4% this year, compared to 2.2% in the old industrial nations.
As a result of their large current account surpluses, the developing countries also account for 75% of the world’s $6 trillion of foreign exchange reserves. They also have sovereign wealth funds with assets of $2.5 trillion. Developing-country stock market capitalization now exceeds $17.8 trillion, compared to $2.2 trillion in 2000. The capitalization of the U.S. stock market is $17.5 trillion.
If you ever needed a motivator for getting out there and start building a market for your products, services and membership, this would be it. Eventually everyone follows the money.
By the way, did anyone notice how many non-US actors, producers, writers and musicians won in last night’s academy awards…