The Center of the Global Economy
Let’s start with a dot in the Atlantic Ocean, maybe 900 miles from Morocco. Then, follow that point, as it glides eastward toward Izmir, Turkey. According to London School of Economics Professor Danny Quah, you have just seen how the world’s center of economic gravity has shifted during the past 30 years.
Explaining that he was not referring to a “cluster” of economic activity, Dr. Quah told readers, for example, to imagine a world with only 2 cities having economic activity. The cluster of economic activity could be found in each city. However, the center of economic gravity would be an inactive spot between the two. While there are many clusters, there is only one center.
Dr. Quah has a wonderful map in his paper showing the actual and projected eastward trajectory for his world center of economic gravity (WCEG) between 1980 and 2050 (p. 13).
1980: 24 degrees west; 66 degrees north, 2800 kilometers beneath the surface of the Atlantic Ocean.
2008: 27 degrees east; 74 degrees north. “…just south of Izmir Turkey, on the same longitude as Minsk and Johannesburg.”
2049: 92 degrees east; 30 degrees north. “…no large city precisely but surrounding it are Urumqi, China, Kolkata, India, Dacca and Chittagong Bangladesh.”
To calculate the WECG, Dr. Quah covered “GDP in all of the world economy.” You might want to look at his paper to see how he identified and then used data from 693 locations.
The Economic Lesson
NYU economist William Easterly tells us that we will all benefit from the growing wealth of poorer nations as worldwide production and demand grow.
Dr. Quah meanwhile suggests that as we observe WECG march eastward, correspondingly, global inequality, political power, and monetary movement will also shift.