Forecasting Net

Look into the future


The rise and fall of modern empires - Part I

Posted by Forecasting Net on October 1, 2011 at 1:35 AM

Observe the shift of power from Western to Asian economies, in this "journey" of global economic dominance, starting after World War II all the way up to 2010. Find out why this is a long term trend and how we could have predicted it decades ago.


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Categories: Economy

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Reply Claus Hermansen
5:39 AM on June 21, 2012 
Very interesting analysis - remember the vibrant hype about these trends in the 80's, though we had at that no idea how bad things would evolve. I would however love to elaborate this analysis with population - growth in Asia is mostly based on a massive and exponentially growing population. GDP per inhabita would be an interesting parameter to bring to the table in order to analyze this even further. Is the growth really based on low-skilled labour or are they in fact taking over some of the - traditionally western - hightec skills that we pride ourselves of in Europe and America. If so, then we're in deep s...! Will it only be a matter of time?
Reply JK
2:37 AM on July 4, 2012 
This has been no surprise at all. In fact, to me it seemed very clear even in the 1960's that some interesting dynamics were going on in the world. As soon as large manufacturing companies started moving their business to China because of cheap labour (and lots of it) then it became very obvious that this trend would continue and the current scenario would arise. The Chinese, based on my observations and experience, are not necessarily very innovative, however, they are amazing at deconstructing any type of product and remaking it for considerably less than it can be made in the Western World. In the process they have developed the hightech skills that have previously come from the Western World.
They are also very good long term strategic planners and what we see happening now is, I believe, a result of their plans being extremely well executed. The Western World unfortunately can be likened to the 'boiling frog' scenario - we have played right into their hands - the fly caught in the spider's web for instance.
Poverty is being exported throughout the world.
There move into some of the African, and other countries and taking their people with them to carry out the work is another great example of a well-executed plan to take over the world.
We are in deep s..... , and there may not be anyway of climbing out of it.
Sorry to be so gloomy and doomsdayish.
Reply Greg
7:41 PM on July 10, 2012 
Interesting... What I want to see is the amount of outsourcing of products and jobs to Asia over the same period - I'd say we were "fueling" the growth - while not really paying attention to it.
Reply Riccardo
11:32 AM on July 23, 2012 
I read this analysis, it's very interesting!!! Compliments!!
Reply Daniel
11:05 AM on August 17, 2012 
Yes there is no doubt that these trends exist, but I might add that markets historically are up and down and through the years adjustments have to be taken to stabilize markets. The west has to understand the trends and take proper measures to stabilize market conditions.
Reply FinG
5:22 AM on September 28, 2012 
Population and Demographics along with levels of productivity are the key to economics!! Quite simply if everyone in the world was working to the same output then the larger countries would have higher GDPs. The only reason China and India ever lagged behind is the lateness of their respective industrial revolutions in converting their massive populations to highly productive massive populations. As they continue to develop I foresee their % of global GDP increasing. This will most likely increase to a point that is unsustainable and then come back to a more sustainable level (due to increased levels of welfare most likely). We in the UK saw our industrialisation happen first and experienced unprecedented levels of growth. Once we reached a high level of productivity (per person that is) the only way increase was by smaller increments of productivity (diminished returns) and population growth. As our population hasn't grown by much compared to the growth in the world population and our increases in productivity haven't matched global increases we see our % of global GDP reduce. The USA have seen this exact phenomena in the last 100yrs as well. China and India may well go through some startling peaks and troughs over the next 100 years but once they get their populations to the levels of individual productivity we achieve in the west they will truly be the largest nations (by GDP) in the world. As a footnote, as a non economist, I struggle with the concept of measuring everything by a nations GDP. As GDP is hugely affected by population levels I feel that measurement on GDP per person, a level of productivity, would be more appropriate. We talk about Japans lost decade (in national GDP terms) but has their population lost living standards... I argue that their standard of living is certainly better than 20 years ago and surely that is all that matters in the end. Thank you for your time.
Reply Jason Scott
9:11 PM on December 12, 2012 
This is very interesting but no surprise. I guess when it is put in front of you so simply then it seems profound. The US has become more of a place for consumption and less for production and innovation.
Reply Gert lundmark
11:09 AM on November 30, 2013 
Reply Fred Hapgood
7:31 PM on September 17, 2014 
It is hard for me to see how China is going to manage over the next twenty years. Its success till now has been about feeding exports with low wages and commodity assembly services. But that role is going away -- counties with even lower labor costs are coming online and commodity assembly is vanishing into the machines. In theory it could develop a consumer economy, like ours, but it is a one- child culture with no social security and no medicare, which means it pretty much has to have a crushingly high savings rate, which it does (50%), which puts a consumer-driven economy out of reach. It is way too poor to develop a meaningful social security and medicare system -- one that would change savings behavior -- from scratch. Also in theory it might retain the export model while moving up the value chain, but that means competing against countries like Germany (and the US), where it not only has no inherent advantages (which would be the equivalent of low-cost labor) but lots of disadvantages, like being on the other side of the world, not speaking English, having dodgy attitudes towards intellectual property, a highly politicized commercial culture, and frightening levels of pollution.

I just don't know how it is going to keep growing. I suspect that in twenty years we will look back at all theses stories about how China is going to dominate the global economy the way we do today about the things people were saying about Japan twenty-five years ago. In any event I am comfortable predicting that China's growth rate is going to lose at least half a percentage a year for the next decade.
Reply John Abraham
3:33 AM on September 18, 2014 
A further analysis removing Japan whose demographics are similar to Western Europe should be done to get a picture of how the Asuan growth is population growth dependant.
Reply Marc Thomas
5:08 AM on December 5, 2014 
There is actually even less of a surprise if you extend the horizon of the analysis. If you go back a few thousand years, and look at the share of global GDP, there was a very long period where ASIA completely dominated the global share of GDP. We are actually just going back to the historical trend line. I was looking for the chart on this subject but have not found it.