China,India and the US

Abstract

Despite developing countries accounting for an increasing share of world income and exports, no significant shift in the ranks of the 25 largest economies by GDP has occurred between 1965 and 2007. And only China, and perhaps India but none of the other large developing economies, would account for a significantly higher share of world income by 2025 or 2050. Furthermore, in terms of per capita income, India would continue to remain relatively poor. We then find that there was no significant shift in economic power between 1990 and 2005 on the basis of an index formed from about 20 indicators of economic power. Next we measured how far countries were from the US on the basis of these indicators. Practically all countries, particularly the European ones, had substantially reduced the lead of the US. But China and India starting far away had moved only slightly closer to the US. The ability to generate new technology is a major factor in the power rankings. China had reduced the lead of the US in technology generating factors whereas India had almost stagnated. Consequently, China’s prospects of increasing its power were better than India’s.