Shawdesh Desk:

The world economy is experiencing a deep process of economic convergence, according to which regions that once lagged the west in industrialisation are now making up for lost time, writes Jeffrey D Sachs

THE World Bank’s release on May 30 of its latest estimates of national output, up to the year 2022, offers an occasion to reflect on the new geopolitics. The new data underscore the shift from a US-led world economy to a multipolar world economy, a reality that US strategists have so far failed to recognise, accept or admit.

The World Bank figures make clear that the economic dominance of the west is over. In 1994, the G7 countries (Canada, France, Germany, Italy, Japan, UK, US) constituted 45.3 per cent of world output, compared with 18.9 per cent of world output in the BRICS countries (Brazil, China, Egypt, Ethiopia, India, Iran, Russia, South Africa, United Arab Emirates). The tables have turned. The BRICS now produce 35.2 per cent of world output, while the G7 countries produce 29.3 per cent.

As of 2022, the largest five economies in descending order are China, the US, India, Russia, and Japan. China’s GDP is around 25 per cent larger than the US’ (roughly 30 per cent of the US GDP per person but with 4.2 times the population). Three of the top five countries are in the BRICS, while two are in the G7. In 1994, the largest five were the US, Japan, China, Germany, and India, with three in the G7 and two in the BRICS.

As the shares of world output change, so too does global power. The core US-led alliance, which includes the US, Canada, UK, European Union, Japan, Korea, Australia, and New Zealand, was 56 per cent of world output in 1994, but now is only 39.5 per cent. As a result, the US global influence is waning. As a recent vivid example, when the US-led group introduced economic sanctions on Russia in 2022, very few countries outside the core alliance joined. As a result, Russia had little trouble shifting its trade to countries outside the US-led alliance.

The world economy is experiencing a deep process of economic convergence, according to which regions that once lagged the west in industrialisation in the 19th and 20th centuries are now making up for lost time. Economic convergence actually began in the 1950s as European imperial rule in Africa and Asia came to an end. It has proceeded in waves, starting first in East Asia, then roughly 20 years later India, and for the coming 20–40 years in Africa.

These and some other regions are growing much faster than the Western economies since they have more ‘headroom’ to boost GDP by rapidly raising education levels, boosting workers’ skills, and installing modern infrastructure, including universal access to electrification and digital platforms. The emerging economies are often able to leapfrog the richer countries with state-of-the-art infrastructure (eg, fast intercity rail, 5G, modern airports and seaports) while the richer countries remain stuck with aging infrastructure and expensive retrofits. The IMF’s World Economic Outlook projects that the emerging and developing economies will average growth of around 4 per cent per year in the coming five years, while the high-income countries will average less than 2 per cent per year.

It is not only in skills and infrastructure that convergence is occurring. Many of the emerging economies, including China, Russia, Iran, and others, are advancing rapidly in technological innovations as well, in both civilian and military technologies.

China clearly has a large lead in the manufacturing of cutting-edge technologies needed for the global energy transition, including batteries, electric vehicles, 5G, photovoltaics, wind turbines, fourth generation nuclear power, and others. China’s rapid advances in space technology, biotechnology, nanotechnology, and other technologies is similarly impressive. In response, the US has made the absurd claim that China has an ‘overcapacity’ in these cutting-edge technologies, while the obvious truth is that the US has a significant under-capacity in many sectors. China’s capacity for innovation and low-cost production is underpinned by enormous research and development spending and its vast and growing labour force of scientists and engineers.

Despite the new global economic realities, the US security state still pursues a grand strategy of ‘primacy,’ that is, the aspiration of the US to be the dominant economic, financial, technological, and military power in every region of the world. The US is still trying to maintain primacy in Europe by surrounding Russia in the Black Sea region with NATO forces, yet Russia has resisted this militarily in both Georgia and Ukraine. The US is still trying to maintain primacy in Asia by surrounding China in the South China Sea, a folly that can lead the US into a disastrous war over Taiwan. The US is also losing its standing in the Middle East by resisting the united call of the Arab world for recognition of Palestine as the 194th United Nations member state.

Yet primacy is certainly not possible today, and was hubristic even 30 years ago when US relative power was much greater. Today, the US share of world output stands at 14.8 per cent, compared with 18.5 per cent for China, and the US share of world population is a mere 4.1 per cent, compared with 17.8 per cent for China.

The trend toward broad global economic convergence means that US hegemony will not be replaced by Chinese hegemony. Indeed, China’s share of world output is likely to peak at around 20 per cent during the coming decade and thereafter to decline as China’s population declines. Other parts of the world, notably including India and Africa, are likely to show a large rise in their respective shares of global output, and with that, in their geopolitical weight as well.

We are therefore entering a post-hegemonic, multipolar world. It too is fraught with challenges. It could usher in a new ‘tragedy of great power politics,’ in which several nuclear powers compete — in vain — for hegemony. It could lead to a breakdown of fragile global rules, such as open trade under the World Trade Organisation. Or, it could lead to a world in which the great powers exercise mutual tolerance, restraint, and even cooperation, in accord with the UN Charter, because they recognise that only such statecraft will keep the world safe in the nuclear age.

CommonDreams.org, June 6. Jeffrey D Sachs is a university professor and director of the Centre for Sustainable Development at Columbia University, where he directed The Earth Institute from 2002 until 2016. He is also President of the UN Sustainable Development Solutions Network and a commissioner of the UN Broadband Commission for Development. He has been advisor to three United Nations Secretaries-General, and currently serves as an SDG Advocate under Secretary-General Antonio Guterres. Sachs is the author, most recently, of ‘A New Foreign Policy: Beyond American Exceptionalism’.