Duncan’s Economic Blog

The World Economy in One Picture

Posted in Uncategorized by duncanseconomicblog on July 29, 2010

I’d highly recommend Danny Quah’s short (7 page) note on the world’s centre of economic gravity. I think it is the clearest, and certainly the most vivid, demonstration of the key trends in the global economy I’ve seen. Because one trend is key – economic power is moving east.

The key map is below (black points are historic ones from 1980 until 2008, red are projections):

 

As Danny explains:

This note describes the dynamics of the global economy’s centre of gravity. Such dynamics form part of more general ongoing research on the world’s shifting distribution of economic activity (Quah 2010). By economic centre of gravity, I mean the average location of the planet’s economic activity measured by GDP generated across nearly 700 identifiable locations on the Earth’s surface. The calculations in this note take into account all the GDP produced on this planet.

I report below that the world’s economic centre of gravity located in 1980 at a point in the middle of the Atlantic Ocean. By 2008, however, that centre of gravity had drifted to a location at about the same longitude as Izmir and Minsk, and thus east of Helsinki and Bucharest. This change occurred not due of course to the emergence of Turkey or Belarus, but instead from the continuing rise of China and the rest of East Asia.

Extrapolating growth in the 700 locations across Earth, the world’s economic centre of gravity is projected by 2050 to locate, literally, between India and China. Observed from the Earth’s surface, that centre of gravity will move a distance of 9300 km, or 1.5 times the radius of the Earth, from its 1980 location.

There we have it, thirty years ago the world’s centre of economic activity was in the mid Atlantic, today it is around Turkey, in thirty years time it will have reached India and China. This is the new globalization and I’d like to hear how Western politicians plan on dealing with it.

12 Responses

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  1. tim f said, on July 29, 2010 at 10:37 am

    Surely the point depends on what type of projection is used for the map, and on where the map is positioned (you’ve used a standard Europe/Africa in the middle one there, but what if you put Europe on the right and Asia on the left?)

  2. duncanseconomicblog said, on July 29, 2010 at 10:42 am

    Tim,

    True – and the analysis also assumes a flat earth, otherwise the centre of economic activity would be well below the surface.

    But I think the point is to show, using a standard map, how economic activity has shifted eastwards over the last thirty years. The trend is pretty clear – and this is the clearest representation of it I’ve come across.

  3. Danny Quah said, on July 29, 2010 at 11:16 am

    As tim f says, “surely” the point depends on the projection. My paper discusses this: the projection is to the normal cylinder tangent to the Earth’s equator. There is no “Europe/London”-centric perspective imposed.

  4. A very strange question indeed said, on July 29, 2010 at 11:55 am

    […] Why should politicians deal with it? Quite apart from whether politicians can or that we’d even trust them to deal with matters economic, why on earth should they? […]

  5. CharlieMcMenamin said, on July 29, 2010 at 1:02 pm

    Yes, it’s a revealing map – but it could be made even more revealing if, as suggested above, the map showed a projection with the Americas in the middle. Presumably the line would then be moving westwards, from a starting point somewhere in, say, the Appalachians (reflecting the European pull on the US economy) and would now be, say, crossing the Rockies, heading for the Pacific, reflecting the growth of China and East Asia more generally. But by having the line still on, or near too, the American mainland it would also signify the continuing (if declining) relative strength of the USA

  6. Andreas Paterson said, on July 29, 2010 at 1:03 pm

    For me, this shift in power seems more like a massive opportunity than anything else, rising wealth in the east will give us a great deal more trade opportunities than we have at the moment, rising wages will make us more competetive. The only real worries would seem to be the political worries about China’s ruling regime.

    (and I’ve just noticed that saying this mean’s I agree wtih Tim W)

    • duncanseconomicblog said, on July 29, 2010 at 1:14 pm

      Andreas,

      I’m not saying this shift is a bad thing! I’m more just amazed how absent comment on it is from every day political discourse, compared to, say, the talk of relative economic decline from the 1950s onwards.

      Yes it opens up new potential trading partners, but what really interests me is how the rules of the game in terms of global economic governance will shift in the years ahead.

  7. gastro george said, on July 29, 2010 at 3:34 pm

    “… a great deal more trade opportunities …”

    I’d rest easier if I didn’t think that this is mainly going to be over-priced “aspirational” tat and Heat magazine.

  8. Agog said, on July 29, 2010 at 7:39 pm

    It doesn’t matter what projection you use – the Pacific Ocean will still be huge and almost devoid of economic activity, right? So inevitably the centre of gravity will be over on this side of the globe. Unless Europe is wiped out by a meteor strike, or New Zealand starts to massively outperform…

  9. Judge said, on July 30, 2010 at 10:29 am

    “I’d like to hear how Western politicians plan on dealing with it.”

    I’m not a huge fan of David Cameron, but doesn’t it seem odd to post this, on a day when Cameron is leading a huge UK trade delegation to India, and not mention it?

    • duncanseconomicblog said, on July 30, 2010 at 10:42 am

      A fair point – although I’m not sure Cameron’s response is especially well thought out.

  10. Danny Quah said, on July 31, 2010 at 8:02 pm

    Duncan –

    If you or the others are interested, my blog posting

    http://dq6bn.blogspot.com/2010/07/global-economys-shifting-centre-of.html

    gives an animated version of this picture. My website

    http://econ.lse.ac.uk/staff/dquah/index_own.html

    has that animation too, and also keeps available still the image above.


    Danny


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