The ‘Economics focus’ column in the Economist is not the first thing I turn to when my weekly copy arrives. Nestling at the back of the finance and economics section, it is quite rare that I ever read it at all. This week’s column (The celestial economy) drew my attention by presenting the graph above. Depicting the world’s top three countries by economic dominance, it neatly demonstrates the shift of world power from Europe to America and predicts the next shift to China and India.
At the height of Britain’s economic influence, when Britannia ruled the
waves and presided over an empire on which the sun never set, it had a 16.4%
share of global economic power. This was almost twice the rate of the next two
powers combined (Germany on 9.3% and France on 8.3%).
By 1973, the USA had become the world’s economic hyperpower, with an
18.6% share of global economic power. This time the USA’s dominance was clear –
it had much more than the next two powers combined (with both Germany and Japan
on 8%). By 2010, the rise of China was evident. America was still the leading
power (with its economic power at 13.3% compared to China’s 12.3%), but the
momentum was clearly with Asia.
In his new book Eclipse: Living in
the Shadow of China’s Economic Dominance, Arvind Subramanian argues that
China will eclipse America sooner than is thought. By 2030, he forecasts China
to have 18% of global economic power and for the USA to have slipped to just
10.1%. India now features in the top three, and, at 6.3%, starts to close the
gap with the USA. The reason for the decisive shift eastwards? Subramanian
argues it is the threefold combination of demography, convergence and
“gravity”.
A special report on the future of jobs in this week’s Economist included a list of the world’s top ten employers. In 2010 the two largest employers in the world were the US Department of Defence (covering all branches of the American armed forces) and the Chinese Army, with 3.2m and 2.3m employees respectively.
The list demonstrates a number of trends, including the rise of China (five of the top ten are Chinese companies (including Hon Hai, who are headquartered in Taiwan)), the scale of state concerns (only three of the top ten are private companies) and the global power of Walmart, whose workforce almost equals the Chinese Army and makes it easily the biggest private sector employer.
The most interesting name for me was the one I had never heard of. Hon Hai Precision Industry entered the list at number 10 with 800,000 employees. Hoovers describe Hon Hai as “the biggest electronics company that you have never heard of”. Its principal subsidiary, Foxconn, is better known following a series of employee suicides and scandals.
Hon Hai are the manufacturing muscle behind Apple’s recent success stories. From iPods to iPads, Hon Hai has provided the components and assembled the products. It has not put all its eggs in one basket and also makes mobile phones for Nokia, computers for Dell and electronics for Sony.
