By far the most rapid shift in the world’s economic center of gravity happened in 2000–10, reversing previous decades of development. The world’s center of economic gravity has changed over past centuries. But since the mid-1980s, the pace of that shift—from the United States and Europe toward Asia— has been increasing dramatically as illustrated below. The following chart is created by Mckinsey using the late Angus Madison’s data. Economic center of gravity is calculated by weighting locations by GDP in three dimensions and projected to the nearest point on the earth’s surface. The surface projection of the center of gravity shifts north over the course of the century, reflecting the fact that in three-dimensional space America and Asia are not only “next” to each other, but also “across” from each other.
It is not an exaggeration to say that we are observing the most significant economic transformation the world has seen. China is urbanizing on 100 times the scale of Britain in the 18th century and at more than ten times the speed. As a result, the global balance—measured by the earth’s economic center of gravity—is shifting back to Asia and at a speed never before witnessed.
For thousands of years, most people lived on close to subsistence incomes, and global economic power spread around the globe in a pattern that reflected the world’s population. Population growth and migration were slow, and the earth’s economic center of gravity was relatively stable for almost 2,000 years. But the industrialization and urbanization of Europe and the United States dramatically changed the global economic map, transforming these regions into the major economic powers in the world. Until the mid-20th century, there was a rapid shift in the earth’s balance toward Europe and later to the United States. The rise of Japan helped change the direction, particularly in the 1980s. However, it has been in the most recent decade of 2000 to 2010 that we have observed the fastest rate of change in global economic balance in history. During this period, the world’s economic center of gravity has shifted by about 140 kilometers per annum—about 30 percent faster than in the period after World War II when global GDP shifted from Europe to North America.
Data source: Angus Maddison, University of Groninge (1926 – 2010). Angus was a world scholar on quantitative macroeconomic history, including the measurement and analysis of economic growth and development.
Source: This blog contains excerpts from the Mckinsey Global Institute report Urban world: Cities and the rise of the consuming class, June 2012.