Point/counterpoint from the FOOL
point Harmy:
The US has always seen itself as the worlds economic elephant but when you compare the population of the US to that of India and China combined you begin to see that whereas China and India can only sell to a market of 300m US citizens, the US has a market of over two billion it can sell to.
counterpoint Mcain:
Population alone is the wrong way to look at this, at least at this point in time -- wealth counts. From the Economist's World in Figures, for the year 2000 (most recent year given), the world GDP (income, in effect) was $31.5T. The G7 nations accounted for $21T, almost exactly two-thirds. The US alone accounted for almost 30%. If you are producing goods/services for exports, you target the US, the G7, and select smaller countries with high per-capita income. You don't target Ethopia, the country with the lowest per-capita income, even though its population is larger than any of the UK, France, or Canada.
Of course it's really even more complicated, since the distribution of income within the population can matter. The US has a per-capita income of $35,000 -- the distribution doesn't matter as much because "everyone" is relatively wealthy. Effectively all households have a color TV (in excess of 99%). The market for DVD players is a large percentage of households. In India, the per-capita income is $450, but that number is skewed by an enormous number of people with incomes in the range of $100, so you would have to ask how much of the population can afford imported goods/services. The market for DVD players is almost certainly smaller in India than in the US, despite the much larger population.
Can India and China grow their economies so that they become the dominant players on the world economic stage? Accounting for a share of the world's production (and more importantly, consumption) that matches their portion of the population? Put me down as a vote for "doubtful" for one reason -- energy. My own theory is that rich countries are rich because they consume large amounts of energy in their production processes. At a minimum, say that the lack of energy to apply to those processes will limit how productive (hence how wealthy) a country can become. The world does not appear to have the resources to allow India and China to consume energy at the per-capita level of, say, Japan. |
