Who are the Real Economic Powers in the World? The following data was taken from the 2008 International Monetary Fund. It shows some significant points of interest regarding the ranking of the top ten countries according to Gross National Product. First the United States is by far the largest economic power at a glance. However upon closer examination, if the European Union is consider one entity, and there is no reason why we shouldn’t, then it would be the largest economic power on the planet.
It should also be noted that the Japanese and People’s Republic of China’s economies follow the EU and US a distant second and third respectively. Further, five out of the top ten economic powers are members of the EU with Russia and Brazil ranking in the top ten for significant reasons which will be mentioned as we go forward.
The next table reflects the growth rate of the countries of concern. As one can see out of approximately two hundred nations sampled in the study China, Russia and Brazil lead the list with respect to the countries that also rank among the top ten having the largest GDPs. However, if the focus was solely on the top ten with respect to growth rate China would be the only country in both categories, the top ten having to do with GDP and top ten highest growth rates.
Somewhat of a side note, most if not all of the countries not withstanding China that rank in the top ten regarding growth rate would be considered belonging to the third world. Of further significance, although the top ten countries with the highest GDP historically appear to have relatively stable economies, given growth rate there is no guaranty the 2008 ranking of the ten largest economies is an indefinite lock. This will become more obvious as the resources needed to keep these high powered economies at a given ranking are reviewed and determined deemed self sufficient or interdependent relying on imports resulting in a transfer of wealth or shift in economic power.
To date there are some interesting differences in how these countries have reached the current level of distinction. For example, the Chinese have a certain level of energy interdependence coupled with great human resource. Human resources entail a variety of advantages and span a wide gambit from shear labor to intellectual innovation. The Russians, the UK and the Brazilians have large populations and all the advantages that entails with an additional return; they for the most part are energy independent. Unlike Russia and Brazil the UK has a low growth rate. This may be the result of a political economic decision for the country to live within its means.
The European Union and Japan have highly sophisticated populations, mature and relatively stable economies but are heavily dependent on foreign sources for energy. This combination causes for a delicate balance and a significant reduction in growth rate.
The United States is a very unique animal in this regard. It has a sizable population with all the advantages that entails. It also produces a significant amount of its own energy. The problem is the United States’ economy like the European Union is a juggernaut with a massive hunger to produce. This requires more energy than it generates.
What does all this mean? Well there appears to be an adverse relationship with economic growth rate and energy interdependence. The only exception for the moment is China. However, China’s insatiable appetite for growth is also being fueled by something left out of the equation, coal.
Both the US and China have significant coal reserves. The difference is, in the US environmental forces have made inroads preventing total exploitation. While in China the use of coal goes virtually unconstrained. There are other significant questions with respect to coal usage such as cost-effectiveness and how well it balances on the economy of scales. So for now the implication regarding the use of coal in the economic scenario of Chinese versus United States remains somewhat of an unknown.
The following graph shows the projected rates of economic growth based on Gross National Product, GDP for the United States, The Peoples Republic of China, Russia, and Brazil. The European Union has been conspicuously left out because for the comparison the US is the benchmark and relatively speaking the EU will stay on par with the US with no apparent change all things being equal.
So if one assumes the rate of economic growth as stationary and all else being equal it would be extremely difficult for the standings with respect to US, Russia, and Brazil to change significantly even after many decades.
Yet if the current growth rates remain unchanged with respect to the United States and The People’s Republic of China by the year 2023 The People’s Republic of China will surpass the U S. The estimated GDP for the PRC would be 17.9 trillion to the US 17.6 trillion.
However the dependence on foreign oil may be one reason why the Chinese may not be able to sustain their existing rate of growth. Below is a table that shows the top ten producer of oil. Absent from this list is the European Union and its members, as well as Japan, and Brazil. Interesting enough Russia, the United States and China appear in the top five with Russia in the second position out producing the US in the third position. Saudi Arabia is the number one producer of oil in the world.
It is worth noting the United States and China produce a significant amount of oil while both countries find the need to import more than they produce. On the other hand Russia produces enough oil to sustain its economy while exporting more than two thirds of its production.
Just a quick note about the above table, it depicts those countries in the top fifteen of a given category. For example the ranking column only refers to those countries that fall within the top fifteen oil producers. While the other categories with respect to imports, consumption and export also reflect those countries that fall within the top fifteen for the specific group but their ranking is not shown. The exercise to where those countries are positioned within the given categories is left up to the reader to decipher.
So according to the table the UK is not one of the top fifteen producers and is not among the top fifteen importers of oil but it is among the top fifteen consuming countries. The presumption is the UK produces enough oil to sustain its current economic growth. By the same token India is not among the top fifteen producers of oil but is among the top fifteen consumers as well as importers.
Lets assume GDP and economic growth rate are directly proportional to energy consumption. The United States consumes more than twice as much as the next highest consuming country which is China. The US also imports more than 1.45 the amount it produces. While the US’s economy is more than four times larger than China. China also consumes more energy than it produces. The PRC uses almost twice the amount of energy it produces relying heavily on the importation of oil to the tune of an additional 93% of production.
The table also indicates that India and Japan may be even in a more vulnerable interdependent situation. They are not major producers of oil but are significant consumers and importers along with all the other EU countries that made the GDP list with the exception of the UK.
Of significant interest is Russia and Brazil. Like the UK they are among the top ten economies while at the same time showing total non reliance on the importation of foreign oil. Russia because of it vast gas and oil reserves is in a unique position she also is among the top oil exporters. In the case of Brazil she has uniquely position herself by adopting a national policy using sugar cane as an alternative fuel for its automobile industry.
The obvious conclusion here is the US and China. Both will have to significantly increase oil production or find alternative energy sources if they are capable of doing so. Otherwise sustainability of the US and Chinese economies, the continued growth is at risk. Just like the United States, China’s economy for continued sustenance may fall victim to the cost and supply side of Middle East oil.
