Surpise: the balance of economic power is changing. Good. April 3, 2007 This week's special report on the world economy of The Economist points out that “the emerging world now accounts for over half of global economic output, measured in purchasing-power parity (which allows for lower prices in poorer countries). […] Developing countries chew up over half of the world's energy and hold most of its foreign-exchange reserves. Their share of exports has jumped from 20% in 1970 to 43% today. […] Maybe it will take a little longer than 2040 to fulfil Goldman Sachs's prediction that the world's ten biggest economies, using market exchange rates, will include Brazil, Russia, Mexico, India and China. But these are arguments about when, not whether, change will happen. And things could speed up: even the rosiest predictions underestimated Asia's ability to recover from its 1997 financial crisis. This shift is not as extraordinary as it first seems. A historical perspective shows it to be the restoration of the old order. After all, China and India were the world's biggest economies until the mid-19th century, when technology and a spirit of freedom enabled the West to leap ahead. Nor should it be regarded as frightening. The West, as well as hundreds of millions of people in developing countries, has benefited from emerging-world growth. Globalisation is not a zero-sum game: Mexicans, Koreans and Poles are not growing at the expense of Americans, Japanese and Germans. Developing countries already buy half the combined exports of America, Japan and the euro area. As they get richer they will buy more. […] But the two main challenges for the West are long-term political ones. One has to do with accepting that there will be some Western victims of globalisation. Adding 1.5 billion people to the global labour force has boosted the return to capital and richly rewarded rich Westerners; but in Germany, Japan and the United States, real wages for the median worker have barely budged. None of this is an excuse for protectionism—unless you want to make everybody poorer. But there may be fiercer debates, even in America, about using the tax and benefits system to redistribute more of the winnings. The other challenge has to do with geopolitics. As the balance of economic power in the world changes, mustn't the balance of political power change too? […] Making such adjustments will no doubt be awkward. But these are the problems of success. A world in which most people enjoy prosperity and opportunity is surely better than one in which 80% are mired in economic stagnation. Celebrate the riches that globalisation has brought—and be prepared to defend the economic liberalisation that underpins it." You can access the full article here