The economy is so large and so vigorous that the United States has always been No. 1 in the ranking of the world’s economies. Up to the early part of the post-World War II era, the other top places in the ranking were occupied by European countries—West Germany, Russia (then called the Union of Soviet Socialist Republic), the United Kingdom and France.
Then, as the second half of the 20th century proceeded, the ranking began to change—the result, mainly, of economic-policy priority setting, technological advances and world trade pattern changes. Asia was stirring and Japan was the first non-Western country to challenge the pre-eminence of Europe in the world economic ranking.
With its industrial infrastructure virtually decimated by World War II, Japan had the advantage—as it did its wartime ally Germany—of entering brand-new manufacturing plants run with the latest technology. By the early 1970s, Japan was ready to claim an upgrade in the world economic ranking; by the start of the 1980s, it had dislodged the revitalized Germany as the world’s No. 2 economy, after the US.
But the tale of Asia’s economic challenge to the world did not end there: It was just beginning.
While Japan was savoring its status as the world’s No. 2 economic power, China had been determinedly strengthening its economy, getting the maximum mileage from its now-ideologically unshackled economy. With pragmatic economic policymaking and a market base of 1.2 billion consumers, China rapidly and surely made its way up the world economic ladder. Before the advent of the 21st century China had elbowed Japan aside to attain a gross domestic product (GDP) higher than that of the Land of the Rising Sun.
Germany had become the fourth largest economy, followed by the UK and France. With the breakup of the USSR, Russia—now renamed the Russian Federation—had moved several places down the world economic ladder.
But the remarkable rise of China and Japan is not the end of Asia’s challenge to the West. Now there is India, with a population of approximately 1 billion people, posing an economic challenge to the major European countries.
The 2018 World Economic League Table prepared by the Center for Economic and Business Research (CEBr) projects that this year India will become the world’s fifth-largest economy, overtaking France and the UK. “Despite temporary setbacks, India’s economy will still catch up with those of France and the UK,” said a high official of CEBr. The temporary setbacks included a new sales tax and restrictions imposed on high-denomination banknotes, he said.
If CEBr’s forecast turns out to be right, the world’s largest economies will be the US, China, Japan, Germany, India, France and the UK, in that order. Three out of six: not bad at all for Asia.
The research institution expects that Asian economies will dominate the list of the top 10 world economies by the end of the next 15 years. My guess is that the South Korean and Taiwanese economies will join that list. The Singaporean economy would have been a candidate for inclusion. Unfortunately, Singapore is but a city-state with a small GDP and small production and consumption bases.
And the Philippines? Will it ever be one of the Asian economies with gross domestic product deserving of inclusion among the world’s largest economies? Given our present political situation and national governance, I can only say, as the wistful ballad suggests: “Dream On.”