Global Growth Generators: Moving beyond 'Emerging Markets' and 'BRIC.'
By Citi March 01, 2011 04:06 PMCiti's Willem Buiter and Ebrahim Rahbari recently outlined new systematic research by Citi Investment Research & Analysis [CIRA] into global generators of growth, focusing principally on countries, but proposing to extend the approach in future research to regions, cities, commodities, asset classes, activities, and products. The authors said that while the so-called "BRIC" countries -- Brazil, Russia, India and China -- are a key part of the world growth story through 2050, they are examining the potential in a much wider range of markets.
Their research suggests a trajectory of strong overall global growth, with average real GDP growth rates of 4.6% per annum until 2030 and 3.8% per annum between 2030 and 2050, translating to a rise in world GDP in real PPP-adjusted terms from 72 trillion USD in 2010 to 380 trillion USD in 2050. Buiter and Ebrahim identify developing Asia and Africa as the fastest growing regions, driven by population and income per capita growth, followed by the Middle East, Latin America, Central and Eastern Europe, the CIS, and finally the advanced nations of today. Transformations include China overtaking the US to become the largest economy in the world by 2020, but then being overtaken by India by 2050.
The Citi team observes that many countries with emerging markets have reached a threshold level of institutional quality and political stability, and are already positioned well for growth. For poor countries with large young populations and at an earlier stage of development, Buiter and Rahbari point to a clear path: open up, create some form of market economy and invest in human and physical capital. At that stage, many countries are poised for more growth from a period of "catch-up" and "convergence" with the developed world, the paper said. Still, there will be booms and busts, with "growth disasters driven by poor policy, conflicts, or natural disasters."
Buiter and Ebrahim identify Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam as having the most promising per-capita growth prospects. "They are our 3G countries," the paper said.