The Shift in World Economic Power

By Judy Nagel, Envision Board Member and Upward Mobility Signals Team

Could the Indian and Chinese economies outpace the economies of the United States and Western Europe? Economic analysts say yes. Projections show the U.S. percentage of world GDP shrinking from 16% to 12%, with China’s share growing from 16% to 27% and India’s GDP growing from 7% to 16%. (These new levels are anticipated by 2100.)

So how is this possible? Currently China’s and India’s productivity growth lags behind that of the United States, but, if Chinese workers were as productive as American workers, China’s GDP would exceed the U.S. GDP by a factor of 4.3. Because this analysis is based on productivity and demographics, however, immigration growth would boost the U.S. economy in the long term.

Economists cited in “Will China and India Become the World’s Top Economies? It Depends” take note of – and exception to – a 2019 study that positions the U.S. as “the end-of-century economic kingpin.” Another perspective these authors offer puts India in the lead by 2100. Why? Because India’s population will be double that of China but with the same labor productivity. They characterize the possible position of the U.S. by century’s end as “particularly grim,” and suggest that Western Europe could move from one of the world’s largest economies to one of its smallest.

The authors identify a variety of changes that could determine the actual “economic kingpin” at the end of this century, including reduction of legal immigration into the U.S. or China’s continued one-child policy along with its preference for less efficient state enterprises over a more efficient private sector. These are definitely early signals that the response from multiple players will determine future economic dominance.

For a summary as well as links to the specific reports cited, read this article from Forbes by Stuart Anderson, Executive Director of the National Foundation for American Policy.