Growth economies are catching up with legacy economies

The growth economies are only a few decades old. They are overcoming the hurdles of their colonized past. Now their influence is growing in a world order which hasn't kept their interest at the core.

- PRANJAL SHARMA

Power equations, national strengths, economic influence change over decades. The changes are often noticed after they have occurred.

New realities are recognized belatedly and often reluctantly.

The key players in the global economy can be divided into two categories now. The legacy economies and the growth economies.

Legacy economies are mostly in North America and Western Europe.

Legacy economies have been dominant for a few centuries. Most of them grew by exploitation of colonies and by converting the extracted wealth to fuel their own future. Even in the post-colonial world, their strength and influence allowed them to create a world order suited to their interests. Their growth rate ranges from 1-4%.

The growth economies are only a few decades old. They are overcoming the hurdles of their colonized past. They are fighting against the odds in a world order which doesn't keep their interest at the core. They are a bit more disparate lot, spread across South America, Asia and Africa. But their growth rate is between 5-7%.

The relationship between these two groups have been lopsided. Legacy economies produced while the rest of the world consumed.

Legacy economies prefer that growth economies rise to the level of being good consumers. Growth economies are celebrated as long as they consume the products and services of the legacy economies. But the tipping point appears when growth economies become strong enough to produce for themselves and compete with legacy economies.

Countries that were champions of globalization for decades are now discovering their ill-effects. For them, globalization has a simple definition. Legacy economies must be the dominant producers and other economies must be the pliant consumers. If other economies grow strong enough to produce and compete globalization will be in danger. Now North America and Western Europe are walking back from their unbridled support to globalization.