East vs West global powers – A decade in review pt1

A long headline for this decade might read: In the contest for global supremacy, China gains, western nations maintain with the US in the lead, Russia’s military-first strategy conceals decline, and disunited Islamic nations can’t compete.

As the last decade unfolded, pundits predicted again that the United States would lose its number one super-power perch, this time to China. It didn’t happen, but it seems inevitable that someday the United States will be downgraded. The same four centers of power have been competing for global supremacy for five hundred years: China, Islamic powers (in this article, Islamic powers include Iran, Saudi Arabia and Turkey), Russia, and western powers (western powers include the United States and the EU with emphasis on Germany, France and the UK). All have claimed the top spot at one point, and all continue to covet it. Right now, the competition is hottest between the oldest power of the group, China, and a western nation that was born around the last time China was on top.  

Economic Data

At the start of 2010, most of the world was in the midst of recovering from the Great Recession. The year 2009 saw uncharacteristic negative growth rates in Russia (-7.8%), Iran (-7.4% in 2012), the European Union (-4.2%), the United States (-2.5%), Turkey (-4.7%), and Saudi Arabia (-2.1%). Meanwhile, China’s economy soared 9.2%. No question China began the second decade of the 21st century in an enviable position. 

In 2014, it was announced that China had overtaken the US economy on a purchasing power parity (PPP) basis, but not on a nominal or market rate basis. China maintains a PPP lead and the US a market rate or a nominal lead. According to the IMF, the US economy will reach $21.44 trillion in 2019 (up $6.9 trillion or 47% for the decade). China will reach $14.14 trillion (up $8.26 trillion or 140% for the decade). If the 28 countries in the EU are counted as one entity, the EU came in 2nd with an estimate of $19.1 trillion (up $2.1 trillion or 12% for the decade). If the western nations in the transatlantic alliance are combined that amounts to $40.5 trillion. Russia came in 11th place with an estimated $1.6 trillion (up $120 billion or 8% for the decade). The combined estimate for the twenty-one Muslim-majority nations in the Middle East and North Africa was $3.5 trillion (up $900 billion or 32%). With the exception of the United States all of these other major powers saw a significant dip in growth rates from the first to the second decade of the 21st century. 

Looking at per capita income, data presents a better view into potential changes in quality of life, at least those derived from cash. According to the IMF, between the start and end of the decade per capita income on a nominal basis in the United States rose from $48,310 to $65,111. Germany, France and the UK went from $40,000-$42,000 to between $41,000 and $47,000. China went from about $4,500 to $10,098. Iran, Saudi Arabia, and Turkey went from $6,500, $19,100, and $10,500 respectively to $5,500, $23,600, $8,957 respectively. Russia went from $11,500 to $11,162. In the second decade of the 21st century, nominal per capita incomes, without accounting for inflation, in Iran, Russia, and Turkey actually declined. In Turkey and Iran, it was over 14%. (Note: For all but western nations, per capita income on a PPP basis will be higher and can be substantially higher.)

There were also some changes in global competitiveness, which could affect future economic growth. Competitiveness, according to the World Economic Forum, is a measure of “the ability of a country to achieve sustained high rates of growth in gross domestic product (GDP) per capita.” During the decade, the United States shifted up two places from 4th to 2nd. The EU’s major economies, France, Germany and the United Kingdom, were in the top 15. China rose from 27th to 26th. Turkey moved from 67th to 61st, but Iran and Saudi Arabia plunged from 69th to 99th, and 21st to 36th respectively. Russia leapt from 63rd to 43rd. (Note: The high spots for western nations are consistent with democratic political systems and liberal economic systems. The lower spots for the others are consistent with autocratic systems that focus on control rather than free people and markets.)

In the next article, we’ll finish a review of the decade by looking at changes to military power, political orientations, and backward progress for gender equality for the same four centers of power. We’ll also touch on uber factors that could influence future decades.

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