Power Shift

LONDON. — London -- For the past five years, the Chinese economy has grown at an average of just under 10 per cent. India has broken out of the old "Hindu growth rate" (2 per cent economic growth, 2 per cent population growth, per-capita income unchanged), and has been growing at around 7 per cent a year.

Count in Indonesia, Malaysia, Thailand, South Korea and Taiwan, which have all been growing at 8 or 9 per cent a year, and you're literally talking about half the human race. While the billion people in the industrialized Western economies have spent the past five years coping with 1 per cent growth or less, two and a half billion people have been experiencing economic growth 7 to 10 times faster.


Given the magic of compound interest, how long do you think that can go on before the world is utterly changed? And what will the heirs of the first industrial revolution (the 19th-century one) do for a living then?

It's amazing how change creeps up if you're not paying attention. The evidence is there, you just have to read the writing on the wall -- and yet when it finally happens, most people are surprised.


In 1966, I was teaching as a historian at a military staff college. I still recall the reaction when the college brought in a specialist lecturer who demonstrated to us, with graphs and statistics, that pretty soon Japan would be a major force in the world.

Within 10 years more than half of those students would become generals or deputy ministers or ambassadors: They don't send you to staff college if they don't expect you to go pretty far in your career. They were a well traveled, multinational lot, and relatively few of them were racists.

And yet, even after seeing the lecturer's statistics, hardly any of them really accepted the implications of the Japanese pattern of growth. It was their job to understand that sort of thing and prepare for the future, and still they couldn't get their heads around it. Which is approximately where most of the West's leaders stand today.

The West (which now includes Japan, for the purposes of this discussion) will pull out of its long recession eventually. But its long-term growth rate never rises above 2 per cent. That's how it works in "mature" economies, as the Japanese are discovering to their chagrin.

In the newly industrializing countries, by contrast, 5 per cent per annum is practically a depression. And though most of fastest-growing countries are in Asia (still home to half the human population), other "Third World" countries like Chile, Mexico and Turkey are growing just as fast.

The implication, obvious and inescapable, is that in 10 years the Third World as we have known it for the past half-century will no longer exist. Most of Africa, bits of the Middle East and Central America, maybe even a few unlucky Asian countries like Burma will still languish in misery and hopelessness, but a whole phalanx of ex-Third World countries with new-found economic clout will be setting the international agenda.

We won't even have to wait until Chinese or Mexican per-capita incomes are comparable to German or American ones, which will take 30 years or more. (You doubt that? The Japanese covered exactly that distance in that time.)

Given the much larger populations of the newly industrializing countries -- well over 3 billion by the end of this decade, versus a stable Western population of 1 billion -- even the quite modest per-capita incomes they will enjoy a decade from now will make the new players formidable rivals to the old.


There is a power shift under way in this decade bigger and faster than anything the world has seen since the early 16th century, when Europe suddenly emerged as master of the globe. And the repercussions go far beyond who kowtows to whom.

In terms of the global environment, already gravely endangered, we are probably talking about three to five times the pressure that the existing industrialized societies put on it. The Chinese will start buying cars, the Indians will have their motor-scooters and their fridges, and even the Laotians will expect a fan and a TV set. Any North-South deal to curtail consumption will have to involve the principle that everybody shares the burdens and sacrifices of protecting the environment equally.

It will come as a profound shock to Western voters when they find their governments negotiating a treaty that sets equal targets for per-capita energy consumption for countries as different as the United States and China, with no more than a 10-year phase-in period. But the treaty will be necessary to prevent ecological disaster, and the West will have lost the leverage that used to let it demand special privileges.

And how will the older industrialized countries make their living when the newer ones can match them on quality in manufactured goods and beat them conclusively on price? They will have to go back to living on their wits, if they can remember how -- but there are millions of people in the industrializing countries who have much more recent practice in doing that.

About the only competitive edge that the West will retain, 10 or 15 years from now, is the creative tension that comes from having highly mobile, ethnically mixed populations of whom a large proportion are recent immigrants. And won't that be a lovely irony?

Gwynne Dyer syndicates a column on foreign affairs.