When I joined the Confederation of British Industry as its Director-General in January 2000 I was briefed on many things very quickly. One set of predictions that stuck in my mind was that China, then the World’s 7th largest economy would overtake the UK (then 4th) by 2010, catching Germany to take 3rd place by 2015 and Japan by 2020, overtaking (if ever) the USA by 2040.
Last month China was officially recognised as the World’s second-largest economy, overtaking Japan. The UK had been overtaken by 2005 and Germany dropped to 4th in 2008.
The smart money is on China becoming the largest economy on the Planet by 2020. That really is some performance!
For the first time ever, it has been the developing economies of Brazil and China, India and South Korea that have led the World out of recession. In fact, if it wasn’t for them, we in the
mature markets would still be deep in the mire. According to the World Bank, by 2050 China and India will together account for nearly 50% of global GDP, about the same as the G7 group of countries do, put together, today.
Emerging economies have certain characteristics that mark them out as fit for purpose in the globalisation race that is the 21st Century, or more properly (and with respect to Brazil who will, I believe, become a real powerhouse over the next few years) Asia’s Century: High savings rates, skilled people, innovative strategies for growth, shrewd governments and large, getting-richer domestic markets.
And what are some of the characteristics of mature economies? Struggling to come to terms with weak domestic demand pressures from overcapacity, stubbornly high unemployment, more expensive borrowing, potentially uncompetitive tax and regulatory regimes, increased protectionism on a beggar-thy-neighbour road to a further downturn and big roles for Governments crowding out the taking of personal responsibility and diminishing the perceived need to skill-up to face the challenges of globalization.
So that’s alright then!
Now no-one said that creating wealth and jobs in the 21st century, be it in a mature or developing economy, was going to be easy. How do we measure growth in a changed World?
What constitutes success? What about living standards? Health? Education? The Environment? Security? These less precise standards of measurement of a successful economy are not as easy to define as raw growth in GDP but many a developed economy would say that they are up there with the most important ones when success is assessed.
For instance, success for the USA in Asia’s Century will in part be defined by how she accommodates China, India, Brazil and others at the Top Table. Americans wrongly thought that Globalization was Americanization. The rude awakening over the past three years courtesy of the biggest, sharpest and nastiest recession for 75 years has set out the harsh reality for every American. Success for China will, in part, be defined by how it steps up to the plate of global responsibility that accompanies the vast economic might accruing to the Middle
Kingdom by the second. The World, which buys its goods and invests in its towns and cities, will judge China, in part, by how it adapts to its changed status and how it deals with the inevitable environmental issues such growth throws up. Success for the European Union will only be achieved if it gets on the page of the 21st Century and stops marching valiantly towards the 1970’s!
520 million people living in sustainable, democratic, long term peace for the first time ever will need more investment in Universities than in cows, less regulation, not more, and the end of a dumbing-down culture of sameness and inward-looking conformity from Brussels.
And the secret for delivery of success on whatever criteria is chosen? Leadership! in politics; in Business; in the Media; in Sport. A marvellous FIFA World Cup in South Africa was the
result of Leadership. The inclusion of 40 million Americans in state healthcare programmes for the first time was the result of Leadership. Saving the Greek economy and the meltdown of the Euro by Germany was the result of Leadership. And businesses across the World, large and small, show leadership every day in so many ways. Governments, as Tony Blair once said, do not make the difference when it comes to economic success; he was right. Governments have never created wealth, ever. Only Business does that.
So the real difference in Asia’s Century will be how a nation’s businesses, with their creative ingenuity and the enterprise, skill and sheer hard work of their people, make a difference in their communities, in the global trading environment and as agents for constructive change and social improvement around the World. Come to think about it, Business Leadership won’t make a difference over the next 90 years; with the ability to skill people, generate wealth, pay tax and develop life-enhancing products from drugs to aircraft, from the internet to clean water, Business leadership will make THE difference.