Future Arrives
The world's economic center is shifting with breathtaking rapidity. The trends are clear, both in the numbers and in the new realities on the ground; the general direction is from west to east and from north to south. This shift in power and influence is not only economic but also demographic, political, and cultural.
China recently passed the United States to become the world's largest economy defined in terms of gross domestic product (GDP) purchasing power parity. Although this news created only a small blip in the Western business press, it represented a historic milestone that is likely to be followed soon by other landmark events. Calculations based on market exchange rates – a more common yardstick of GDP – indicate that China will surpass the United States to become the world's undisputed economic leader by 2030.
India is also expanding rapidly; current estimates indicate that by 2050, China, the United States, and India will be the top three economies in the world.1 While China and India still have many rural and comparatively unaltered areas within their borders, their growing industrial and technological prowess as well as their higher ranking among the world's economies signify that they have officially graduated from “emerging” to “emerged.”
Europe's relative economic position is changing simultaneously. Membership in the Group of Seven (G7), an economic forum originally founded in the 1970s by the world's most industrialized countries, provides a symbolic example. Original G7 members from Europe included France, West Germany, Italy, and the United Kingdom. If the same organization were to be recreated in 2050, it would probably include no European member nations. According to current projections, there will not be a single European country whose economy is among the world's top seven by that time.2 In order to offer Europe G7 entry, it would be necessary to combine two or three countries, or perhaps all of Europe.
Humanity has witnessed these kinds of changes before. China and India previously dominated the global economy for centuries. China, for example, created revolutionary innovations such as gunpowder and printing that were later exported to Europe while supplying the Silk Road and far-reaching maritime trade routes with precious goods. Each country has approximately four times the population of the United States and more than double the number of people in Europe as a whole. Nonetheless, the ongoing recasting of global positions represents a tectonic shift in the modern economic order and is in part a transition back to the future (see Sidebar 1.1).
Sidebar 1.1 The Shifting World Center: China and India
3 China's population in 2012 was estimated at 1,377,065,000. See World Statistics Pocketbook, 2014 edition (New York: United Nations, 2014), 43; Matt Schiavenza, “A Surprising Map of the World's Population Shows Just How Big China's Population Is,” The Atlantic, August 14, 2013, www.theatlantic.com/china/archive/2013/08/a-surprising-map-of-the-world-shows-just-how-big-chinas-population-is/278691/.
4 Adam Minter, “China's Runaway Steel Industry,” BloombergView, September 2, 2014, www.bloombergview.com/articles/2014-09-02/china-s-runaway-steel-industry; Lydia DePillis, “U.S. Steel plants are on a layoff spree. Here's why,” Washington Post, March 16, 2015, www.washingtonpost.com/blogs/wonkblog/wp/2015/03/16/u-s-steel-plants-are-on-a-layoff-spree-heres-why/
5 USGS Cement Statistics 1900–2012; USGS, Mineral Industry of China 1990–2013, quoted in Bill Gates, gatesnotes, June 25, 2014, www.gatesnotes.com/About-Bill-Gates/Concrete-in-China. An estimated 45 percent of China's cement is low-grade, however, and its industry is beginning to consolidate. See also, Russell Flannery, “As the Market Hardens,” Forbes Asia, July 2015, 64.
6 Richard Dobbs, James Manyika, and Jonathan Woetzel, “The Four Global Forces Breaking All the Trends,” book excerpt from forthcoming publication, No Ordinary Disruption, McKinsey Global Institute, April 2015, www.mckinsey.com/insights/strategy/The_four_global_forces_breaking_all_the_trends?cid=other-eml-alt-mgi-mck-oth-1504.
7 Howard French, China's Second Continent: How a Million Migrants Are Building a New Empire in Africa (New York: Knopf, 2014).
8 Jason Chow, “China Is Now the World's Biggest Consumer of Red Wine,” Wall Street Journal, January 29, 2014, http://blogs.wsj.com/scene/2014/01/29/china-is-now-worlds-biggest-consumer-of-red-wine/.
9 “China Produces and Consumes Almost as Much Coal as the Rest of the World Combined,” U.S. Energy Information Administration, May 14, 2014, www.eia.gov/todayinenergy/detail.cfm?id=16271.
10 United Nations, Department of Economic and Social Affairs, World Population Prospects: 2012 Revision, June 2013, http://esa.un.org/unpd/wpp/index.htm, 43.
11 “An Indian Summary,” The Economist, www.economist.com/content/indian-summary.
12 “Wasting Time,” The Economist, May 11, 2013, www.economist.com/news/briefing/21577373-india-will-soon-have-fifth-worlds-working-age-population-it-urgently-needs-provide.
13 “India Overview,” World Bank, www.worldbank.org/en/country/india/overview.
14 U.S. Energy Information Administration.
15 Hawksworth and Chan, “The World in 2050. 2.
The world's shifting economic center has vast implications for almost everyone, particularly those who have been at the top and at the bottom of the global economic order. During the past century, U.S. and European leadership and business models largely dominated multinational corporate cultures. The economic shift toward markets such as China and India means that these countries and their leaders will increasingly shape the way business is conducted.
New leaders from Asia and elsewhere will need to consider their own core values and vision for the future and how they can inspire their global colleagues. Beyond material success, what will make their careers fulfilling and worthwhile? If current or aspiring leaders from Europe and North America go on with business as usual – assuming that their privileged position will last forever – they risk looking like human ostriches, heads buried in the sand to avoid the speeding freight train of globalization. Rather, they must embrace the planet's inexorable tilt toward rising economies and learn how to succeed together with employees from around the world who want to be treated as full partners. Sometimes the consequences are very personal, and one's career can take an unexpected turn.
Promotion Postponed
Ingrid speaks in quick spurts over the phone from her office in London, where she has just returned after three years in India. She is Swedish, but started her career with a company in New York and then moved to London, so her accent is hard to place. Ingrid is in her mid-30s, works for one of the world's most famous banks, and saw the opportunity to move to Bangalore and gain international