Countries classified today as developing will dominate global savings and investment in less than a generation, according to the World Bank. India and China are forecast to provide 38% of the total investment by 2030.
In 17 years time developing countries will provide for more than 50% of the total global stock of capital, up from about 33% they do today, the World Bank said in its Global Development Horizons report. The largest portion of that stock will reside in East Asia and Latin America. In absolute terms, China is projected to become the largest saver by a landslide, accounting for $9 trillion in 2010 dollars by 2030. India ranks the second with its $1.7 trillion.
On the investment side, China is also projected to become the largest, providing 30% of total investment by 2030. Taken together, the remainder of the popular BRIC club of developing nations – Brazil, India and Russia – will account for 13% of global investment.
“Productivity catch-up, increasing integration into global markets, sound macroeconomic policies, and improved education and health are helping speed growth and create massive investment opportunities, which, in turn, are spurring a shift in global economic weight to developing countries,” the report explained.
The service sector – one of the key criteria for distinguishing between the developed and developing world – is also going to make a huge leap in developing countries. Employment in services is projected to become more than 60% of their total employment, which brings them closer to the developed world.
Results of the research signal a real reshuffle in the alignment of world economic forces, according to Maurizio Bussolo, lead Economist and author of the report.
“GDH [Global Development Horizons report] clearly highlights the increasing role developing countries will play in the global economy,” he said.
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