>Willem Buiter, chief economist at Citigroup, says that the United States needs to get ready to be Number 3 in the world, economically speaking.
Don’t come after me, email him.
It is inevitable, though. Let’s run some numbers.
Population of the United States: …. 310,000,000 people
Population of China: ………………1,400,000,000 people
Population of India: ……………….1,100,000,000 people
A Rule of Thumb that I use is that 50% of a country’s population is essentially the Labor Force.
Labor Force of The United States: … 150,000,000 (Actual = 153 million; CIA World Factbook; 2010)
Labor Force of China: ………………….700,000,000 (Actual = 819.5 million; CIA World Factbook; 2010)
Labor Force of India ……………………650,000,000 (Actual = 478.3 million; CIA World Factbook; 2010)
Now, let’s look at a measure of Economic Productivity, the GDP (Gross Domestic Product).
GDP of The United States: …. $14,700,000,000,000 (in PPP; CIA World Factbook; 2010 )
GDP of China: ………………….. $9,872,000,000,000 (in PPP; CIA World Factbook; 2010)
GDP of India: …………………… $4,046,000,000,000 (in PPP; CIA World Factbook; 2010)
Judging from these numbers, The United State’s economy is about equal to the combined economies of China and India.
However, economic growth for the last 5 years or so has not been promising. The U.S. has been hindered economically by two wars, stagnating domestic economic policy.
Economic growth in China and India is promising. For the last 10 years, China has experienced economic growth of at least 9% annual growth. In the years between 2003 – 2008, economic growth was in excess of 10%.
For India, the story is more measured, by the trend is mostly the same, expansive economic growth. Outside of a few quarters between 2004 – 2010, economic growth in India has been in excess of 7%.
In comparison, the best year between 2001 – 2010 for the United States occurred in 2004. After growing from about 0.5% in the first quarter of January 2002, the economy improved to an annual growth rate of 4% in the first quarter of 2004.
Not that I want to portray a bleak picture; the numbers essentially speak for themselves.
China and India both have much larger populations, individually, than does the United States. Both China and India have much economic growth left; in fact, many would argue that the true economic potential of both countries is 20 – 40 years away, given that China / U.S. relations remain congenial, and that Pakistan / India relations do not run the world to the brink of annihilation (again). Likewise that China / India relations remain congenial, and that India does not find China’s attempt to become the de facto leader in Asia a threat.
We’ve had a good run at being the world leader.
As our educational systems falter, as American continue to be distracted from STEM education, as parents and educators argue about how to manage classrooms, as children lose discipline, as entitlement programs create in-fighting and bickering among political rivals and as Americans, born into entitlements, fight to keep them, and as the United States presses "democracy" within the Middle East and Central Asia, our economic competitors will continue to mature and evolve. China and India, seeking to make theirs lives better, will look at consumer markets domestically and abroad, and build new relationships. Chinese and India will (and do) focus on training, education, science, and math.
That the United States will lose its economic position and status is not really a knock against us, but merely an illustration of how far behind us, economically, both India and China are. Each has come along way in educating populations, and bringing citizens out of poverty.
Each has a long way to go, however, and as India and China cover that distance, the United States will have to evaluate, and continue to re-evaluate its global role.