Publication: Daedalus
Publication Date: 22-JUN-07
Delivery: Immediate Online Access
Author: Fogel, Robert W.
Article Excerpt
What, if any anything, can economic and demographic forecasts tell us about the prospects for capitalism and democracy around the world? (1) To help answer that question, I divided the world into groups based on economic output, tabulated population and gross domestic product (GDP) in 2000, and then forecast population and GDP for 2040. The population forecasts are those of the United Nations. The economic forecasts are mine, but were influenced by the forecasts of the CIA and The Economist.
In the year 2000, as Table 1 shows, six groupings of countries dominated the global economy: the United States, the European Union (which then consisted of fifteen countries [EU15]), India, China, Japan, and a group of six Southeast and East Asian countries (Singapore, Malaysia, Indonesia, Thailand, South Korea, and Taiwan [SE6]). As measured by GDP, these six groupings accounted for 73 percent of the world's economic output and 57 percent of the global population. The balance of the world (including Latin America, Africa, and Eastern Europe) accounted for about 28 percent of GDP and 42 percent of the global population.
Although political power is difficult to define, the United States, at least according to its advanced military technology and its ability to project its military might anywhere, obviously ranks first. The EU15 also has great wealth and advanced military technology. The number of active troops in the armies of the EU15 nations is collectively slightly higher than that of the United States; and although their annual defense budgets, taken together, are only a third of that of the United States, they have nearly as many fighter aircraft as, and more tanks than, the United States does. Perhaps the biggest gap is in hard assets: the EU15 is far behind the United States in aircraft carriers, missile cruisers, destroyers, and submarines.
It is noteworthy that the United States and the European nations that control these military resources generally have freely elected representative governments, and constitutions that guarantee basic human rights. Ever since World War II, the countries that have dominated the world economy have shared a broad commitment to liberal and democratic values.
Table 2 presents the forecasts for 2040. To my mind, the most striking feature of Table 2 is the relative decline in economic power of the EU15, implied by its stagnant population and its modest growth in GDP. This is unsettling, not least because of the central political role that Europe, along with the United States, has long played in promoting open societies.
Although the EU15 population in 2000 exceeded that of the United States by about a third, by 2040 the EU15 population will be somewhat smaller than that of the United States. The projected stagnation of the EU15 population is based primarily on the persistence of extremely low fertility rates. The total fertility rate (roughly the average number of children a woman is expected to have during the course of her childbearing years) has fallen far below the level required for the reproduction of the population (2.1 children) in most EU15 countries, and has been that way for several decades.
One implication of the low fertility rate is that the population of the EU15 is aging rapidly. In the year 2000, the median age in Italy and Germany, for example, was about forty, which is a decade higher than in China and half a decade higher than in the United States. By 2040, the median age in Italy and Germany is predicted to be about fifty. This rapid aging of many EU15 countries means that their dependency ratios (the ratio of economically inactive to economically active persons) will soar. These demographic factors will, by themselves, significantly curtail the capacity for economic growth.
However, political and cultural factors appear to be reinforcing the impediments to economic growth....
NOTE: All illustrations and photos have been removed from this article.
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