Fast-forward to 2050, and the world will certainly look very different from today. A recent PricewaterhouseCoopers research (*.pdf) forecasts that the G7 countries will have handed their primacy to that part of the world which commenter Fareed Zakaria would call "The Rest". China and India are on their way to becoming the leaders in terms of GDP (at market-price estimates).
The reseach has examined the world's 32 largest economies, which produce 3/4 of the world's wealth. But there's one thing its authors may've overlooked. It's the question whether economic weight necessarily means political influence and leadership. That's what's causing both hopes and concerns to the 7 largest developing economies (Brazil, India, Indonesia, China, Mexico, Russia and Turkey, called "E-7" by the PwC). For instance, before fulfilling the predictions of the analysts about "Asia's Century", the likes of China and India would have to find long-term solutions to seemingly trivial problems like education, hygiene, public health, and sustainable development. In China's case, there's also the pressing issue of the smooth transition from a planned economy to a market economy. The more these economies grow (and their appetites for global leadership, respectively), the bigger these problems will be getting.
E-7 is already surpassing G-7 (UK, Germany, Italy, Canada, USA, France and Japan) in terms of PPP GDP. That's a means of measuring the volume of the produced goods and services and comparing countries after converting their respective currencies by an imaginary "international dollar" currency that the World Bank uses for these estimates. Measured that way, the E-7's advantage only means that every product and service coming from those countries is cheaper than its G-7 counterpart. But in order to really take the primacy in global economy, the E-7 will also need to beat the G-7 in terms of GDP at market prices. And in 2014 the developed countries had a 45% larger GDP at market prices, IMF data shows.
The PwC forecats are that the E-7 will remove G-7 from their pedestal on that front towards 2030. By the middle of the century, the new king of the global economy will be about twice as larger as its main rival in terms of PPP GDP, and 50%+ larger in terms of GDP at market prices. During all that time, the E-7 will be the engine of global growth, with an average annual economic growth of 3.8% against 2.1% for G-7. The bulk of that burden will be carried by China and India. The PwC also projects that in 2050 these will be the two largest economies in the world, followed by the US. Japan, which is currently the world's 4th largest economy (PPP GDP) will slide down to 7th position. It'll be beaten by Indonesia, Brazil and Mexico. Today's 5th ranking economy, Germany will slump even further down to 10th, closely followed by Russia and Nigeria.
Such a scenaio is of course highly hypothetical, and full of unknown variables. Still, the shift of economic power towards Asia now seems imminent. The research compares this tendency to the epoch before the Industrial Revolution, when China and India had a monstrously larger GDP compared to the rest of the world, due to their huge population and the relatively efficient agriculture (for that epoch).
Still, despite the purely quantitative indicators of the two juggernauts, the experts do acknowledge the downsides of China and India's economic growth. If China keeps stalling on the tough political decision to shift the economic weight from public to private business, they'd hardly be able to escape the "middle income trap". That's a term that signifies the difficult leap from the initial wild growth that was based on cheap labour and chaotic accumulation of capital, to a more sophisticated phase, where the engine of development is the newly emerged class of highly educated workers, resulting in increased productivity.
In India, which according to WB and IMF forecasts could surpass even China very soon and become the world's fastest galloping economy, the growth has motly been due to the services sector in the last few years. This makes the country's development trajectory rather unusual, because India has made a direct leap from an agricultural society to a service-based economy, without going through all the pitfalls of industrialisation. This means that the main engine of the Indian economy is consumption, as opposed to production (as is the case with China and South Korea).
The PwC forecasts confirm Asia's ascent in terms of economic growth, at the expense of the established leaders at both sides of the Atlantic. In the beginning of the new millenium, this tendency was so strong that in 2001 Goldman Sachs promoted the idea of BRIC (Brazil, Russia, India and China). The guy who coined the term (*.pdf), Jim O'Neill claimed that the future global economic order will depend less on the West, and more on huge economies like those from BRIC(S).
This has contributed to the notion of an imminent, but vaguely defined global revolution of some sorts. In 2004, the then Foreign Policy chief editor warned the West of a worrying "emerging shift in the global power centres". Various commenters were predicting the ascent of the Asian Century. In his 2008 book The Post-American World, Fareed Zakaria added countries like Colombia and Brazil, and also Nigeria to the list of emerging giants. He wrote that the new world leaders will be "like the rest". Except, as LSE prof. Michael Cox commented in a public lecture in 2012, "The big problem of such hypotheses is the fact that their authors implicitly assume there is an equivalence between economic power and political influence".
What's more, economic power cannot be solely estimated through the figures that describe it, but through qualitative criteria as well. India and China are certainly enormous economies and they'll keep growing, but that doesn't automatically make them rivals to the West.
A 2011 research (*.pdf) that showed BRIC in ascent, has put the US economy 4th in terms of competitiveness. For some context, 11 out of the first 15 countries in the list are Western. The remaining 4 are also tightly connected to the West (Japan, Taiwan, Hong Kong [viewed separately], and Singapore). China is down in 27th position, and India is 51st.
Another qualitative criterion is innovation in science and technology. The US currently has 40% of the world's research investments, and 38% of the patents in new technology. What's more, the US hosts 70 Nobel laureates, half of all scientific publications in the world, etc.
Merely measuring the size of national economies also doesn't take into account the influence that a country could project through both "soft" and "hard" power. For example, when China launched its first (and so far, only) carried back in 2011, a number of its neighbours were scared that the "rising tiger" could lay claim to chunks of their territory. A few countries requested increased US military presence in the region. Although the Pentagon does have more carriers than the whole rest of the world combined, Japan, South Korea, Taiwan, and even communist Vietnam found the US military to be a lesser threat than the Chinese one.
Thus, despite the controversial (to put it mildly) military adventures in Afghanistan, Iraq and elsewhere, the US continues to enjoy the support of a wider circle of allies - unlike China. This probably adds to the attractive "soft power" of Western-type education. Out of the 10 most prestigious universities in the world in 2014, 8 are in the US and 2 in the UK, the annual Times research shows. The leading 50 universities feature 38 from the Anglo-Saxon world, and just 2 from China. And there isn't even one Indian university anywhere in the top 100.
India's demographics also illustrates why it's crucial that quantity should be turned into quality. Today, more than half of all 1.25 bn people in India are under 25 years of age. On the one side, this is a potential advantage against the main regional rival China. Because in the next 15 years, the labour market will see an influx of more people than Europe's 4 largest economies combined. But there's the catch. In terms of productivity, India lags drastically behind. If it doesn't find a way to deal with this problem, the working force will cease being a feature and will turn into a burden.
In order to avoid this, India will have to reform its legislation, and fast. Many of the labour laws and regulation acts still date back to the 40s of the XX century. Many of them deal with nonsense like regulating the type and number of spitting trays at the workplace. Others state that a company of 100+ workers needs a government permission if it is to cut personnel or shut down altogether. Due to such obstacles, doing business has become a major problem in India, and these have to be adjusted to the new realities. This means that India should ensure it has adequate regulations and a modernised legal framework to match its dynamic economy, otherwise the advantages of growth will quickly become a burden.
If India doesn't solve these seemingly trivial problems, it could become yet another fleeting economic phenomenon, much like post-war Venezuela. And the Asian Century could come and pass in a heartbeat. History remembers many unfulfilled predictions - like the claim from the 80s about the stability of the Soviet Union, and the assurance of the Federal Reserve of the US from 2005 that the markets could never fail.