Bert, I looked at global scenarios out to 2100 back in the early 2010s, and India came out at #1 in 3 out of 5. The US and China both came in at #1 once each. Here is the synopsis:
1. China will be the world’s largest economy for most of the time between its IMF forecast takeover of the USA in 2016 and mid century in every scenario, even the most pessimistic. However, it finishes the century at number one just once in the five scenarios, reaching
2100 in fourth place twice and second place twice.
2. India is the largest economy in the world in 2100 in three of the five scenarios and is a close second in another two. In four out of five scenarios India spends at least some time as the world’s largest economy.
3. The scenario that produces a world economic structure most consistent with a balance of power scenario (between the USA, Developed Europe, China and India) is one where emerging Asian economies collectively stall around the middle income level. This is also the scenario where the USA rallies back to number one by century’s end after falling behind in its middle decades.
4. Developed Europe finishes the century as the world’s third or fourth largest economy in each scenario, indicating that it will remain economically relevant even in the face of the Asian ascent.
5. While the Japanese will remain a wealthy people, the economy’s size will be surpassed in all scenarios by Indonesia, in most scenarios by Brazil and Russia, and on a single occasion each by Canada and the Philippines.
6. No economy outside the top four will comprise more than 6.1% of world output (a relative position equivalent to China circa 1996) in any scenario. What is highly notable outside the top four is that Indonesia finishes the century as number five in every scenario but one. That implies very strongly that the widely used BRIC grouping of countries is not a particularly useful one for long run analysis. These scenarios highlight that not only are China and India in a very
different league to Brazil and Russia, but also that Indonesia will be a bigger long run economic factor than either of the latter two powers.
When I first heard this projection, I recalled this much-used phrase: “India is the country of the future, and always will be.” True, India was the largest economy in the world for the first millennium CE and for much of the second. But there is nothing foreordained about it regaining its #1 ranking by the end of this century.
India could indeed miss the opportunity, but the demographics alone suggest that it will be the largest economy once again. The conversion in productivity rates (or “effective labor”) may be a bit optimistic, but not out of range of recent historical experience.
Is there any attempt in the modeling to fit it's predictions to past data, say in the last ten years? I have done my own modeling, more naive and simply based on projectinig population, GDP per capita, and their first and second derivatives (i.e. past change in GDP/capita and recent past trend in change of GDP/capita) through time based on countries' records over the last 20 years or so. It doesn't really matter what I see since I am sure the modeling above by the OECD is superior, but I might be concerned if they haven't at least validated their
modeling against historical data, and hopefully fitted the model to the historical data by tuning free
parameters (e.g. country-specific factors) to fit their recent historical records.
Very true! And nobody knows yet, as far as I read the widely varying estimates of productivity effects. But if AI leads to a world of people managing a herd of their own AI agents that do all the work, productivity convergence would be perfect!
I'm not actually an economist so getting out of my depth here. But I have to imagine as technology facilitates productivity-enhancing machines, your total output is determined by limits to other inputs, like raw resources, compute power, AI technology, electrical power. So if one country refuses to share technology or raw resources that turn out to be critical, you don't get convergence.
They have estimated the common parameters (like ultimate share of labour etc) and the individual country’s structural parameters such as macroeconomic stability. Still, in part because of data availability, it is still a rather stylized model.
Didn't expect USA to catch up again. Is the demographic impact realy that strong?
Bert, I looked at global scenarios out to 2100 back in the early 2010s, and India came out at #1 in 3 out of 5. The US and China both came in at #1 once each. Here is the synopsis:
1. China will be the world’s largest economy for most of the time between its IMF forecast takeover of the USA in 2016 and mid century in every scenario, even the most pessimistic. However, it finishes the century at number one just once in the five scenarios, reaching
2100 in fourth place twice and second place twice.
2. India is the largest economy in the world in 2100 in three of the five scenarios and is a close second in another two. In four out of five scenarios India spends at least some time as the world’s largest economy.
3. The scenario that produces a world economic structure most consistent with a balance of power scenario (between the USA, Developed Europe, China and India) is one where emerging Asian economies collectively stall around the middle income level. This is also the scenario where the USA rallies back to number one by century’s end after falling behind in its middle decades.
4. Developed Europe finishes the century as the world’s third or fourth largest economy in each scenario, indicating that it will remain economically relevant even in the face of the Asian ascent.
5. While the Japanese will remain a wealthy people, the economy’s size will be surpassed in all scenarios by Indonesia, in most scenarios by Brazil and Russia, and on a single occasion each by Canada and the Philippines.
6. No economy outside the top four will comprise more than 6.1% of world output (a relative position equivalent to China circa 1996) in any scenario. What is highly notable outside the top four is that Indonesia finishes the century as number five in every scenario but one. That implies very strongly that the widely used BRIC grouping of countries is not a particularly useful one for long run analysis. These scenarios highlight that not only are China and India in a very
different league to Brazil and Russia, but also that Indonesia will be a bigger long run economic factor than either of the latter two powers.
thanks for sharing. I would be interested in reading more detail on your scenarios, which remain plausible.
When I first heard this projection, I recalled this much-used phrase: “India is the country of the future, and always will be.” True, India was the largest economy in the world for the first millennium CE and for much of the second. But there is nothing foreordained about it regaining its #1 ranking by the end of this century.
India could indeed miss the opportunity, but the demographics alone suggest that it will be the largest economy once again. The conversion in productivity rates (or “effective labor”) may be a bit optimistic, but not out of range of recent historical experience.
Is there any attempt in the modeling to fit it's predictions to past data, say in the last ten years? I have done my own modeling, more naive and simply based on projectinig population, GDP per capita, and their first and second derivatives (i.e. past change in GDP/capita and recent past trend in change of GDP/capita) through time based on countries' records over the last 20 years or so. It doesn't really matter what I see since I am sure the modeling above by the OECD is superior, but I might be concerned if they haven't at least validated their
modeling against historical data, and hopefully fitted the model to the historical data by tuning free
parameters (e.g. country-specific factors) to fit their recent historical records.
Very true! And nobody knows yet, as far as I read the widely varying estimates of productivity effects. But if AI leads to a world of people managing a herd of their own AI agents that do all the work, productivity convergence would be perfect!
I'm not actually an economist so getting out of my depth here. But I have to imagine as technology facilitates productivity-enhancing machines, your total output is determined by limits to other inputs, like raw resources, compute power, AI technology, electrical power. So if one country refuses to share technology or raw resources that turn out to be critical, you don't get convergence.
They have estimated the common parameters (like ultimate share of labour etc) and the individual country’s structural parameters such as macroeconomic stability. Still, in part because of data availability, it is still a rather stylized model.
I think the elephant in the room modeling economic output over decades is what happens to the return to labour as a result of AI.