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rate over the last 50 years, he says, it would be 40% smaller today, with corresponding implications for jobs, wages, and the standard of living.7

NEW GLOBAL INNOVATION ECONOMY

The dominant position of the United States depended substantially on our own strong commitment to science and technology and on the comparative weakness of much of the rest of the world. But the age of relatively unchallenged US leadership is ending. The importance of sustaining our investments is underscored by the challenges of the 21st century: the rise of emerging markets, innovation-based economic development, the global innovation enterprise, the new global labor market, and an aging population with expanding entitlements.

Emerging Markets

Over the last two decades, the global economy has been transformed. With the fall of the Berlin Wall in 1989, the collapse of the Soviet Union in 1991, China’s entry into the World Trade Organization in 2001, and India’s recent engagement with international markets, almost 3 billion people have joined the global trading system in little more than a decade.

In the coming years, developing markets will drive most economic growth. Goldman Sachs projects that within 40 years the economies of Brazil, Russia, India, and China (the so-called BRICs) together could be larger than those of the G6 nations together—the United States, Japan, the United Kingdom, Germany, France, and Italy (Figure 9-1). The BRICs currently are less than 15% the size of the G6.8 But India’s economy could be larger than Japan’s by 2032, and China could surpass every nation other than the United States by 2016 and reach parity with the United States by 2041.

The enormous populations of the BRICs (China’s population is now 4.4 times and India’s is 3.6 times the size of the US population9) mean that even though per capita income in those nations will remain well below that in the developed world, the BRICs will have a growing middle class of consumers. Within a decade, nearly 80% of the world’s middle-income consumers could live in nations outside the currently industrialized world.

7

M. J. Mandel. Rational Exuberance: Silencing the Enemies of Growth and Why the Future Is Better Than You Think. New York: Harper Business, 2004. P. 27.

8

Goldman Sachs. Dreaming with the BRICs: The Path to 2050. Global Economics. Paper No. 99. New York: Goldman Sachs, October 2003.

9

US Census Bureau Data Base. “Total Mid-Year Population, 2004-2050.” Available at: http://www.census.gov/ipc/www/idbsprd.html.



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