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Feb. 3 (Bangkok Post) - The economic crisis of 2008-09 appears to be over, but along the way it has transformed the shape and dynamics of the global economy.
This unexpected and dramatic development has not been due to the vigour of the Chinese economy or the BRIC countries as a whole, but the emergence of a major new force in the global economy - the 10 middle-income emergent countries.
These emergent economies are becoming, with remarkable speed, a whole new motor for the global economy.
The 10 biggest are Mexico, South Korea, Turkey, Poland, Indonesia, Saudi Arabia, Taiwan, Iran, Argentina and Thailand. In 2008 they had a collective nominal gross domestic product of $5.6 trillion in 2008, according to the IMF, larger than the GDPs of Japan or China.
In purchasing power parity (PPP), their collective GDP was $8.8 trillion, larger than the economies of Japan and Germany combined. Indeed, these 10 non BRIC countries constitute the world's third-largest economic group, after the European Union and the United States.
Considered in this light, the global economy takes on an interesting new shape with five dominant components:
Trade among emergent nations, sometimes called South-South trade, is now the most dynamic component of the global economy. This is not simply a factor of the BRIC countries - Brazil, India and Russia accounted for just 5.8% of China's trade. The most striking development is China's impact on other emergent markets. Indeed, these markets helped rescue the Chinese economy from its 2008 nosedive.
Taking the year-on-year export figures for November 2009, while Chinese exports to the EU fell by 8%, and its exports to the US fell by 1.7%, China's exports to the Asean nations rose by a dramatic 20.8%, and China's imports rose by 45%.
Within this decade, current trading trends suggest that South-South trade could overtake trade among the G7 nations, and should also exceed North-South trade. Fuelled by rising populations and increased amounts of foreign direct investment, the non-G7 economies are likely to produce more than half of the world's GDP. The G7 economies currently account for 57% of nominal global GDP.
A host of new competitors: Of course, the G7 nations will remain far richer, both as a group and individually, and are likely to continue to enjoy the fruits of their traditional dominance of higher education and technological innovation, among other things. But the large advantage the G7 nations long enjoyed - of comprising the world's biggest, richest and most attractive consumer market - is being eroded with remarkable and unexpected speed. That means that their consumer tastes and habits will no longer be the global norm. New products are less likely to be developed and launched with Western consumers in mind. Research funds and projects are less likely to be predicated on a Western consumer base. The long tradition of Western cultural dominance, and the political influence and soft power that it generated, is likely to face increasing challenges.
The significance of the growth of "The Ten" as a new locomotive force for the global economy is that there will be no single rival to Western culture, but a host of competitors. Brazilian music, Mexican singers, Turkish literature, Argentine dance, Thai sports, Polish architecture, Saudi calligraphy and Indonesian design will all jostle together in the vast new marketplace, alongside Bollywood movies, Russian space tourism and Chinese manufacturers.
