In its video presentation “Looking to 2060: A Global Vision of Long-term Growth,” the Organization for Economic Cooperation and Development predicts that China will soon surpass the United States to become the world’s largest economy, and will account for 28 percent of global gross domestic product by 2030. The OECD also predicts that by 2060 the combined GDP of China and India will overtake that of the OECD economies. Meanwhile, Bain estimates that by 2020 emerging economies will account for two-thirds of global economic growth.
Without doubt, emerging countries are showing more resilience and promise than established economies in the Americas and the euro zone.
While emerging economies have shown potential for many years, they came of age during the global financial crisis. Thanks to prudent government and monetary policies, they have helped stabilize the global economy. A closer look at the emerging market growth story reveals some of its key strengths.
Emerging markets provide an attractive destination for investment funds and already account for nearly half and one-fourth of global foreign direct investment inflows and outflows, respectively. However, they still face challenges, including inflation, income inequity and poor governance, that threaten their growth. They remain countries of contradiction, with high growth on one hand and inequitable growth and underdevelopment on the other.
With almost $2.5 trillion in assets, the Industrial and Commercial Bank of China was the fourth-largest bank in the world in 2012. In India, conglomerates ? such as Aditya Birla Group, one of the world’s most cost-efficient producers of copper and aluminium – are showing their peers how to succeed. As emerging market businesses grow into global leaders, they will strengthen as well as disrupt the competitive landscape. The Indian company Tata Nano’s emergence as a leader in low-cost, four-wheel transportation is a classic example.