Skip to 0 minutes and 4 seconds Perhaps by way of introduction, it’s worthwhile getting some sense of the shape and feel of the world economy. Without over boring you with too many facts and figures, there are roughly 220 countries on the planet earth In other words 220 economies. The biggest economy, until now, at the time being, is the USA . Catching up very quickly, we have China. In the third position, we have India– the third biggest economy. Also amongst the top 10 largest economies, you will find Russia and you will find Brazil. And in fact, if you listen very carefully, Brazil, Russia, India, China amongst the 10 biggest economies, known as the BRIC economies.
Skip to 0 minutes and 51 seconds A feature, in fact, of the 10, and the 20, and the 30 largest economies– there’s quite a few of them– but more than half are to be found in the developing world. Nigeria is the world’s 20th biggest economy. Egypt is right about number 24, and South Africa is the 28th biggest economy. An interesting fact for many South Africans to discover that our economy is not a Mickey Mouse economy. Out of 220, we’re the 28th largest. That means that we have a bigger economy than 192 other countries on this planet. We’re not Mickey Mouse, not trivial, the world knows about us. The world wants to know about us. We’re worthwhile knowing something about.
Skip to 1 minute and 34 seconds At the same time, these few little facts and figures do highlight the fact that economic power is shifting increasingly from the west to the rest. I’d also like to remind you of the fact that back to 2008, the world, and particularly the developed world, entered its worst recession in living memory- the worst recession since the Great Depression. Seven years later, the world was still wrestling with some of the aftermath of that recession. But for now, as I say, I’d like to say a little bit more about this economic power shift from the west to the rest. Part of it is naturally due to the rapid growth of the Chinese economy.
Skip to 2 minutes and 21 seconds Bear in mind China’s home to 1.4 billion people– one fifth of humanity– one in every five people. And that means naturally as their incomes are rising, as they have been for a number of years, they will become really meaningful economic participants.
Skip to 2 minutes and 40 seconds More and more, China’s 1.4 billion citizens are escaping poverty and becoming middle income consumers, which means spending money, which means bringing about more and more economic activity. Of course, some of the reasons for this improvement include in China much better levels of productivity. Wages are pretty low. Labor productivity, therefore, is pretty high. They’ve become highly competitive. They’ve become major exporters of goods, manufactured goods, throughout the world. China’s not the only success story. India’s catching up quite quickly. There we have about 1.3 billion people, a much younger population than China, and possibly, the next big thing after China. Add to that, a whole range of developing countries.
Skip to 3 minutes and 33 seconds In Asia, in South America, in Africa, big populations, many escaping poverty and becoming meaningful consumers. And that is why in the longer term, there’s a general expectation that more and more global economic growth will stem not so much from the developed world, but increasingly from the developing world. This has some very distinct implications for the world.
Skip to 4 minutes and 0 seconds First of all, it does mean in the longer term, world economic growth could remain fairly buoyant, but driven, once again, not so much by the traditional America, Europe, and Japan, but by less traditional trade partners And using the word trade partners reminds one of something else and that is that– let’s take South Africa, let’s take South African companies– in the not too distant past, if we were considering doing business with the rest of the world, that normally meant probably America and maybe Europe. Today, that means considering– yes, certainly America and Europe, as well as a growing list of developing countries– China, India, Malaysia, Indonesia, Philippines, Argentina, Brazil, Mexico, Nigeria, Angola. That’s what we mean by economic power shift.
Skip to 4 minutes and 53 seconds This has profound implications for the future of the world economy, but also, naturally, for the future of trade relationships and investment relationships between South Africa, Africa and the rest of the world. I started off by pointing out that we have a club known as BRIC. The club’s name has changed, of course. It’s now BRICS– the S depicting South Africa. This country has become the fifth member of this club now known as BRICS– not necessarily because we were next in line, but for strategic reasons. Being in many ways one of the more advanced economies in Africa, you can understand why the former club members wanted this country on board as a representative, as it were, of Africa.
Skip to 5 minutes and 39 seconds It’s probably indicating especially China’s desire to have a strong footprint in Africa via South Africa.
Understanding the world and its economics is important to consider when studying the future. The following video is an introduction to this topic.
In your opinion, what global incident has had the biggest impact on economics in the past 25 years?