The Global Economy: What the Future Holds

Introduction

Back in 1991, I wrote a piece speculating that international organizations, special interest groups, and multinational organizations would compete and collaborate with nations to determine the future. I was wrong. Global futures will be determined by the actions of the largest nations. In this two-part series, I identify these nations and speculate on what they will do.

The Meaning of “Largest”

There are several possible “Largest” definitions. They include economic size, people, and geographic area.

a. Economic

When it comes to size, two GDP statistics are worth considering. The first simply involves converting GDP estimates in the local currency to dollars at existing exchange rates. These data are presented in the middle column of Table 1. The right column provides GDP in “purchasing power” terms. It estimates what dollars can actually buy in-country when converted to local currencies. As can be seen in the table, developing countries fare much better under the latter measure. For example, China’s purchasing power GDP exceeds that of the US. Most developing countries do much better via the purchasing power measure, e.g., India, Indonesia, and Turkey. Note that under the purchasing power standard, dollars don’t go “as far” in Switzerland and Australia as they do in the US.

It is worth noting that by both of these GDP measures, China and the US are much larger than any other nation.

Table 1. – GDPs of 20 Largest Countries, 2019 (bil. US$)

Source: IMF

b. Population

Consider next size as measured by population. Regionally, Sub-Saharan Africa’s population is projected to grow by 26% over the next decade. The Middle East will grow by 15% in ten years with Latin America and Asia growing by 10% each.

Table 2 provides data on current and projected numbers for the world’s 20 largest countries. As was true by the GDP measures, China and the US are at the top of the list. However, it is notable and worrying that India that will pass China shortly to become the largest country. Unlike China, India has not invested in the infrastructure needed for its growing population.

There is also reason to worry how the African countries on the list (Congo, Ethiopia, and Nigeria) will manage their growth.

Table 2. – Current and Future Populations of the 20 Largest Countries (in millions)

Source: UN

c. Area

The land areas of the 20 largest countries are presented in Table 3. Russia is by far the largest. But again, China and the US are also near the top. Russia, Canada, the US, Brazil, and Australia are considered “resource-rich” while China and India are considered “resource poor.”

Table 3. – Countries with the Largest Land Areas

Source: Wikipedia

d. Military Budgets

In addition to the “largest” indicators presented above, the future of the world will also be influenced by the size of military budgets. Table 4 gives data on this indicator. The US is the only country actively engaged in ongoing wars. These cut into what they can spend on new military technologies. Even though Russia is ranked only seventh in size of the military budget, it is generally considered the greatest threat to the US militarily. This is possible because they limit their military activities and focus on using the best military technologies in their weapons.

Table 4. – 15 Countries with the Largest Military Budgets