How diverse is our global economy?

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The year 2020 brought the total value of the global economy to $88 trillion dollars. Of course, with 2020 being the year that it was, this value was significantly lower than in 2019. The Covid-19 pandemic has had a more significant impact on economic activity in the first half of 2020, more than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2019 the total value of the global economy stood at $142 trillion dollars, which is more reflective of previous years. However, when examining which countries contribute the most to the economy and why, there are a number of factors we can examine. It is clear from Figure 1 (2019), that the USA dominates the global economy accounting for a ¼ of the total value. A more prominent pattern however, is the contribution of emerging economies, China and India have seen staggering economic growth supporting the World Bank projections forecasted for the global economy. Other

advanced, HIC economies continue to make up large proportion of the global economy, such as that of Japan and Germany, post-industrial servicebased sectors driving their growth. China and the USA are noticeably the main powerhouses of the global economy but what is common amongst the main contributors is that they all have reached a certain level of development, and for China and the USA, superpower status. The countries making the most significant contributions are HICs or NICs, very few fragile states and LICs subsidise the global economy. In terms of GDP, the global economy is driven and funded largely by a few select countries and within them private companies. Diversity in this sense, is not so broad.

The growth of emerging economies is inviting diversity amongst the main contributors to the global economy, the success of China and India for example is a result of the Global Shift. This diversity is also significant in showing that there is an emergence of developing countries and is proof of economic growth across the globe. Another trend identified is that the majority of the top influential countries have been top contributors for a long time. These longstanding funders have developed their economies over time, moving through the various job sectors, all the way up to quaternary sector, and therefore as the majority of their economy is in this sector they have a greater GDP to contribute to the global value. However, emerging countries such as China and India have rapidly caught up, and their jobs sectors are moving higher up the ladder as “high tech” becomes more present in both markets. India’s economy is currently one of the fastest growing economies, emerging market countries will drive future growth as opposed to European countries and will continue to do so, following in the steps of China and the US, but what actually makes up the growth of these economies? There is a pattern to notice amongst the exports that countries trade. The discovery of oil reserves in Pennsylvania, USA was only the start of the country’s extreme wealth. USA has held the top percentage of the global GDP since the 1920s. For decades, crude oil was the most exported product globally, taking up the largest percentage of the world’s exports, however, in more recent decades the world’s top exports have become much more varied.

In 2019, the world’s top most exported products were; Crude oil (870.1 billion US$ worth), cars ($758.4 billion) and Integrated circuits ($720.5 billion).

38 maps that explain the global economy - Vox

The advancement of technology in the last decade has been unimaginable. Economies all over the world are now moving into high tech industry, with the rise of areas’ sole focus being technology, such as Silicone Valley. It is this move into the quaternary and quinary sector that has allowed the countries holding the top percentage of global GDP, and more countries will have to make this transition too if they wish to compete, just as India is doing now. However, whilst tech, oil and automobile parts are the top three exported products, we can see from this figure that the global export trade is becoming more complex.

There are a few trends to note; Russia, the Middle East and South America are the main exporters of oil. These are the leading countries that make up the 15% of today’s global economy that is oil trade however, oil, the most exported product in the world, is exported by the largest number of countries (over 30) whom all split the wealth. This suggests why none of the main oil countries make up a top percentage of the global GDP, as the profit is split. However, many LICs also contribute to the oil sector, which demonstrates it is not simply advanced economies dominating the export, as it is the case with electronics, (see blue on the figure). It is very likely that technology could become the world’s most exported product for a number of reasons, one being that many developed countries are looking to move towards renewable energy. This will decrease the demand for crude oil as fuel and instead increase the demand for the technology needed for renewables such as solar or wind power. The Covid-19 pandemic has also increased the world’s awareness and demand for technology, and many people have started to become familiar with it and the possibilities that it brings such as communication and the ability to work from home. Technology is the way the future is headed, there is so much that it can do, from auto-driving cars to smart phones to virtual reality, and with China’s job sector moving into the quaternary sector and India’s growth of tech hubs such as Bangalore, we can expect a rise in technological advancement and many countries following suit.

However, as much as this figure appears to show that the global economy is diverse in terms of exports, 67.47% of the world’s GDP is generated from the same three products; oil, cars and integrated circuits.

Although with NICs like India, Brazil and Mexico growing and developing their economies at an increasing rate, it is possible that the contributors to the global economy will become much more diverse in the future, coming to include many new economies as well as the traditional, longstanding ones. In terms of exports, it is likely that diversity will increase too as the world moves away from the traditional oil and automobile parts and explores other possibilities such as technology. In the end, if diversity amongst the global economy increased, it would be more likely that other economies such as those in Africa or the Middle East will start to develop and participate in more trade as the market will become much more equal and opportunistic, rather than being narrow, dominated by one or two major economies, mass producing and consuming all the wealth.

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