US Will Be the World's Third Largest Economy

Amidst the turmoil in North Africa and the Middle East, it is easy to overlook a global trend that has been happening for some time. China is on track to become the world's largest economy. India will quickly assume the number two spot. This means for the first time, Asian countries and not European or North American will dictate the world economy. The shift will be unlike anything we have seen. Americans have smug about our economic power since post-WWII industry put the United States squarely at the top. The US manufacturing base is gone and nothing has replaced it. As a result, the United States has become a huge debtor nation. Our educational system is not producing minds with the ability to restart the economy. Our modern healthcare system, love it or hate it, enables an increasingly unfit, medicated dependent population to live longer adding to our debt. The North American Free Trade Agreement sent the remaining manufacturing jobs South and in return we crime. The

Willem Buiter at CitiGroup has constructed a "3G index" to measure economic progress; 3G stands for "Global Growth Generators" and is a weighted average of six growth drivers that the Citigroup economists consider important:

A measure of domestic saving/ investment
A measure of demographic prospects
A measure of health
A measure of education
A measure of the quality of institutions and policies
A measure of trade openness

Using that index the nations to watch over the coming years are Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, the Philippines, Sri Lanka and Vietnam. The United States is notably by its absence. Even if his model is off, you cannot deny the rising influence of China and India. A question my students always miss is; what nation has the largest Muslim population? The answer is Indonesia. Given the United States perception amongst Muslim nations, and the rise of pan-Islamism, the future looks to be quite different.

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