Emerging Markets To Take Up A Larger Share Of The Global Economy

The global economy is one arena where nations have the opportunity to showcase their prowess in strategic development. Historically, the global West has been at the center of all conversations regarding economic growth. Notably, this is down to their strong economic stature and their share of the global economy.

Emerging markets making substantial progress in productivity growth

However, this will change soon as more emerging markets continue to make significant progress regarding productivity and stimulating aggregate demand. Notably, China already surpassed the United States and Europe as the global manufacturing destination of choice. Almost all major global companies have their manufacturing plants in the country. Further, countries like Indonesia are climbing up the ladder and could soon beat many European countries by GDP.

Interestingly, economies tend slowing once they hit the point of saturation. This is to say that no more amount of capital injection can result in higher productivity growth. Notably, most, if not all of the critical sectors in the economies are operating at full capacity. To add salt to the wound, there are numerous risks to further economic growth for the developed economies.

Favorable demographic trends for emerging markets

For starters, once an economy begins to enjoy the fruits of development, the demographic trends begin to dip. Further, as most of the productive population ages, workforce shortages begin to be a big issue. Although developed economies are already countering this trend by automation, it is clear that they cannot automate demand. Notably, human workforce does not only contribute, but also they consume the products of the economy.

In the emerging economies, demographic metrics are mind-boggling. Notably, countries like India are on track to clocking a third of the world population. Interestingly, this implies that India will not only have plenty of productive people to join the workforce but also a robust aggregate demand.

Further, as the other huge economies like China continue to develop, production costs ratchet up. As such, manufacturers will begin looking for destinations where there are cheap labor and one that is readily available. Eventually, the emerging economies will grow at break-neck speeds and while at that, they will gain much more share of the global economy.

Receive News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings with our FREE daily email newsletter.