Emergent economies and urbanisation

The rise of the emerging markets has profoundly changed the global economy over the past 20 years. Led by China, emerging nations have increased their share of world output from 37 per cent in 2000 to more than 50 per cent; their role in trade from 20 per cent to nearly 40 per cent, and their share of global stock market capitalisation from less than 5 per cent to 15 per cent.

This trend has both fed off and stimulated another world-changing trend – urbanisation. Half of the world’s population now lives in cities, with increasing industrialisation raising the pace to take that figure to an expected 70 per cent by 2030. Last year, the emerging economies grew at an average 5.1 per cent; 7.8 per cent in China’s case. The developed world managed just 1.2 per cent. For 2013, the International Monetary Fund expects 5.9 per cent for emerging states, against 1.2 per cent for the rich countries.

China’s Huawei and ZTE rank among the world’s top five telecoms infrastructure manufacturers. Brazilian-led Anheuser-Busch InBev and South Africa’s SABMiller rank among the world’s top five brewers. Mexico’s Grupo Bimbo is the world’s largest baker.

China, which in 2010 overtook Japan as the world’s second-largest economy by GDP, is forecast to replace the US as number one in the next 15 years or so. By 2050, the top five are likely to be China, India, the US, Brazil and Russia.

However, Malaysia, Singapore, South Korea, Taiwan, Thailand and Hong Kong are the only six emerging economies to have maintained annual GDP growth rates of 5 per cent or more for four decades. That said, in 2013 growth in emerging markets is more diverse than it ever has been, with new countries coming to the fore as others slow down. The developed world, dominant since the industrial revolution two centuries ago, is giving way to a new order.

Stefan Wagstyl