The balance of global economic power is rapidly shifting from advanced economies (AEs) to emerging market economies (EMEs). Even as AEs, that had the early-mover advantage in industrialising their nations in the 18th and 19th centuries and improving their per capita income, slackened the pace of growth in the last 50 years, emerging market economies have played catch up, helping improve income levels and quality of life in many parts of the globe.

But will this convergence continue in the coming decades? What are the trends that will determine global growth in the future? What are the challenges to the growth estimates? How can we ensure a sustainable inclusive growth that also keeps in mind the preservation of the limited supply of natural resources?

These are some of the questions answered by The World in 2050 edited by Harinder S Kohli. The book is a well structured compilation of articles by some of the leading policy makers and thought leaders including Enrique Garcia, President of CAF (Development Bank of Latin America), Hiroshi Watanabe, CEO and Governor of JBIC (Japan Bank for International Cooperation), Michel Camdessus, former Managing Director of IMF, and Horst Kohler, former President of Germany.

Two Indians, RA Mashelkar and Montek Singh Ahluwalia are also among the 26 authors, born in 12 countries on five continents, who have contributed towards putting this book together. The rich insights provided by each of these authors make each chapter a delight, besides making the book a veritable source of information and a valuable reference material. The analytical rigour displayed by the authors and the use of graphics to highlight the trends enhances reading experience.

Global mega trends Those involved in strategic decision making, be it at a company, State or national level, constantly seek answers to questions such as: which regions will grow rapidly in the next 20 years; which products are likely to become obsolete; and what trends will determine consumer behaviour in the coming decades.

The answers to these questions are given in the chapter on global mega-trends written by Kohli. These trends are later elaborated upon by various authors.

These trends are applicable to both advanced and emerging economies. One of the trends Kohli writes about is the transformation of the global economy and the rise of the emerging economies.

Explaining this trend, he writes, “The G7 countries will continue to have a much higher GDP per capita than emerging economies. But, it appears clear that from now on, incremental growth in global GDP, investment, and trade will be in emerging markets, particularly in Asia. In terms of living standards, by 2050, 84 countries will have per capita income levels (in PPP terms) higher than those of Southern Europe in 2015, and of those, 50 are now classified as non-OECD.”

Some of the mega trends such as increase in urbanisation, rapid increase in middle-class population and the regions of the world that are likely to witness faster growth are likely to be of great interest to those involved in planning the expansion of any business, especially marketing personnel.

Limited natural resources are one of the defining trends of the next 35 years, according to the authors. But they think that means can be devised to increase output and curtail demand so that this does not become a constraining factor.

On crude oil prices, Kohli writes that the era of high energy prices is over and the demand for fossil fuel will eventually decline by 2050 in response to “action programmes announced in Paris in 2015 to combat climate change and the agreement to reduce carbon emission can also lead, over time, to a more fundamental rethinking about people’s lifestyle”.

Defining growth An entire chapter is dedicated to projection of global growth under various scenarios. The central scenario projected in the book assumes a 3.3 per cent growth for the world as a whole, up to 2050.

The emerging and developing countries are expected to grow at a faster rate of 4.1 per cent, more than twice the rate of growth of advanced economies of 2 per cent. Per capita income of developing countries is expected to increase $11,000 to $33,000.

These assumptions are based on fundamental factors such as — stronger policies as well as structural and institutional reforms initiated by countries in the last two decades, continued priority on human development and the vast scope to converge with the global best practices

While the book on the whole takes an optimistic line, the challenges to growth are also dealt with in sufficient detail.

For instance, Andrew Sheng, Chief Adviser to the China Banking Regulatory Commission, strikes a note of caution when he writes that linear projections of financial deepening by EMEs based on linear projections of GDP are likely to be optimistic because EMEs overtaking AEs by 2050 in terms of GDP size and financial deepening (market size and quality) is neither inevitable nor preordained.

Sheng thinks that “the growth towards the future (2050 being only a point in time) will be punctured by growth, crises, barriers and detours.”

On the whole, the book adopts a holistic approach in giving recommendations for sustainable progress.

Besides talking about governance of global economic institutions and organisations to oversee the entire global economy, large chunks of the book are also devoted to social and political aspects that can affect growth such as inequality, poverty eradication, dealing with climate change impacts and so on.

MEET THE EDITOR

Harinder S Kohli is founding director and chief executive of the Emerging Markets Forum based in Washington, DC. He is the founding director, President, and CEO of Centennial Group International. He is also the editor of Global Journal of Emerging Markets Economies.

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