Will United States Be The World Leader For Ever ?

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This Presentation is based on the analysis of Goldman Sachs Report / Ernst & Young.

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Will United States Be The World Leader For Ever ?

  1. 1. By Kurien Joseph FISAT BUSINESS SCHOOL
  2. 2. CONTENTS LIMITATIONS OF THE STUDY INTRODUCTION OBJECTIVES METHODOLOGY DATA ANALYSIS AND FINDINGS CONCLUSION
  3. 3. INTRODUCTION <ul><li>The term BRIC (Brazil, Russia , India , China) countries was coined by global investment bank Goldman Sachs in the year 2003 </li></ul><ul><li>According to Goldman Sachs , the economies of Brazil, Russia, India and China (BRIC) would together overtake the economies of the six richest countries in the world by2050. </li></ul><ul><li>Using the demographic projections and a model of capital accumulation and productivity growth, we map out the GDP growth, income per capita and currency movements in the BRIC economies until 2050. </li></ul>
  4. 4. <ul><li>If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in US dollar terms </li></ul><ul><li>The key assumption lying behind the projections is that the BRICs maintain policies and develop institutions that are supportive of growth </li></ul>
  5. 5. OBJECTIVES <ul><li>Based on the study done by Goldman Sachs we are trying to show that by 2050 the BRIC countries will be ahead of US. And this is proved by comparing the figures stated in the BRIC report released by global investing firm Goldman Sachs. </li></ul>
  6. 6. <ul><li>Our main objectives would comprise of </li></ul><ul><li>To high light the importance of thinking about the developing world. </li></ul><ul><li>To examine BRICs projections relative to long term projections of the G6. </li></ul><ul><li>To analyse how large a force the BRICs could become over the next 50years. </li></ul><ul><li>to make a comparison of BRIC countries and G6 countries with respect to: </li></ul><ul><li>Growth in GDP. </li></ul><ul><li>Growth in population </li></ul><ul><li>Growth in employment </li></ul>
  7. 7. METHODOLOGY: <ul><li>This paper is prepared based on the following reports published by Goldman Sachs: </li></ul><ul><li>Global economics paper No: 99 published by Gold Man Sachs on 1 st October 2003 and </li></ul><ul><li>Global economics paper No: 169 published by Gold Man Sachs on 16 th June 2008. </li></ul>
  8. 8.   DATA ANALYSIS & FINDINGS: <ul><li>Brazil, Russia, India and China have taken over the domination of USA in the global energy industry shows the newest study by the investment bank Goldman Sachs. </li></ul><ul><li>The strengthening of the economic power of these new giants is already obvious in mining and metal sector, and it is slowly started to be felt in the insurance and consumer industry. </li></ul><ul><li>For all the companies that operate globally, the world is changing at an even faster rate bringing even larger challenges than before - that is true globalization. </li></ul>
  9. 9. <ul><li>According to Goldman Sachs study, at the end of the Gulf world war in 1991 , of the 20 largest companies in the energy sector by market capitalization, 55 percent were American and 45 percent European. However in 2007 , 35 percent of the largest energy companies come from BRIC countries, 35 percent European, and around 30 percent American </li></ul><ul><li>The USA is now trailing behind with the smallest percentage of energy companies in the world </li></ul><ul><li>The BRIC countries are expected to grow at a phenomenal rate of 8 percent in the next several years. </li></ul><ul><li>Experts predict that in the next decade or two many of the current G7 countries comprising USA, Japan, France, Germany, UK, Italy and Canada will be replaced by some of the BRIC countries as the world’s biggest economies. </li></ul>
  10. 10. <ul><li>It is also predicted that china will overtake all of the G6 countries including USA by 2045 and become world’s biggest economy, while India will overtake all of the G6 economies except the USA in the same period. </li></ul><ul><li> As evidence all four BRIC countries are: </li></ul><ul><li>Among the top seven largest countries in land area . </li></ul><ul><li>Among the top eight most populous countries. </li></ul><ul><li>Among the 10 biggest economies in terms of GDP purchasing power. </li></ul><ul><li>d) Among the top 14 biggest economies in terms of nominal GDP . </li></ul>
  11. 11. GLOBAL GIANTS : <ul><li>The world famous magazine “ The Economist ” made an Extrapolated global rankings in their 2008 Edition for the BRIC countries and economies in relation to various categories and has provided an interesting touchstone to the economic underpinnings of the BRIC thesis. </li></ul><ul><li>It illustrates how, despite their divergent economic bases, the economic indicators are remarkably similar in global rankings between the different economies. </li></ul>
  12. 12. Painting BRIC by numbers Lists   Brazil   Russia   India   China Countries by total area 5th 1st 7th 3rd / 4th (disputed) Countries by Population 5th 9th 2nd 1 st Countries by GDP (nominal) 10th 11th 12th 3 rd Countries by GDP (PPP) 9th 7th 4th 2 nd Countries by exports 21st 11th 23rd 2 nd Countries by imports 27th 17th 16th 3 rd Countries by Current a/c balance 29th 5th 154th 1 st Countries by recevied FDI 16th 12th 29th 5 th Countries by foreign exchange reserves 7th 3rd 4th 1 st Countries by external debt 25th 20th 29th 22 nd Countries by public debt 47th 117th 29th 98 th Countries by electricity consumption 10th 3rd 7th 2 nd Countries by no of mobile phones 5th 4th 2nd 1 st Countries by no of internet users 5th 11th 4 th 1 st
  13. 13. <ul><li>GDP comparison of 2007 & that of projected GDP of 2050 </li></ul>
  14. 14. COMPARISON CHART OF BRICS & G6 WITH THAT OF THEIR GDP’S
  15. 17. DEMOGRAPHY & EMPLOYMENT <ul><li>The impact of demographics varies, with labour force growth contributing relatively more to growth in India and Brazil and detracting from growth in Russia, where the US Census projections show the labour force shrinking quite rapidly. </li></ul><ul><li>Where labour force and population growth is rapid, income per capita tends to rise more slowly as higher investment is needed just to keep up with population growth. </li></ul><ul><li>  </li></ul>
  16. 18. POPULATION SCENARIO
  17. 19. <ul><li>Brazil </li></ul><ul><li>Over the next 50 years, Brazil's GDP growth rate averages 3.6%. The size of Brazil's economy overtakes Italy by 2025; France by 2031; UK and Germany by 2036 . </li></ul><ul><li>China </li></ul><ul><li>China's GDP growth rate falls to 5% in 2020 from its 8.1% growth rate projected for 2003. By the mid-2040s, growth slows to around 3.5%. Even so, high investment rates, a large labor force and steady convergence would mean China becomes the world's largest economy by 2041. </li></ul>EACH OF THE ECONOMIES IN BRIEF
  18. 20. <ul><li>India </li></ul><ul><li>While growth in the G6, Brazil, Russia and China is expected to slow significantly over the next 50 years, India's growth rate remains above 5% throughout the period. </li></ul><ul><li>India's GDP outstrips that of Japan by 2032. With the only population out of the BRICS that continues to grow throughout the next 50 years </li></ul><ul><li>India has the potential to raise its US dollar income per capita in 2050 to 35 times current levels. Still, India's income per capita will be significantly lower than any of the countries we look at. </li></ul>
  19. 21. <ul><li>Russia </li></ul><ul><li>Russia's growth projections are hampered by a shrinking population (an assumption that may be too negative). But strong convergence rates work to Russia's benefit, and by 2050, the country's GDP per capita is by far the highest in the group, and comparable to the G6. </li></ul><ul><li>Russia's economy overtakes Italy in 2018; France in 2024; UK in 2027 and Germany in 2028. </li></ul><ul><li>  </li></ul>
  20. 22. PROJECTED U. S $ GDP’S
  21. 23. PROJECTED US $ PER CAPITA
  22. 25. LIMITATIONS OF THE STUDY <ul><li>The key assumption lying behind the projections is that the BRICs maintain policies and develop institutions that are supportive of growth. </li></ul><ul><li>Each of the BRICs faces significant challenges in keeping development on track. </li></ul><ul><li>This means that there is a good chance that the projections are not met, either through bad policy or bad luck. </li></ul><ul><li>Our report is based on the analysis of the secondary data published by Goldman Sachs </li></ul>
  23. 26. CONCLUSION : <ul><li>The results are startling. If things go right, in less than 40 years, the BRIC'S economies together could be larger than the G6 in US$ terms. </li></ul><ul><li>By 2025 they could account for over half the size of the G6. </li></ul><ul><li>Of the current G6, only the US and Japan may be among the six largest economies in US $ terms in 2050 .The list of world’s 10 largest economies may look quite different in 2050. The largest economies in the world (by GDP) may longer be the richest (by Income Per Capita) </li></ul><ul><li>“ SO WE CONCLUDE THAT U.S WILL NOT BE THE WORLD LEADER FOR EVER. “ </li></ul>
  24. 27. Thank you

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