If GDP per capita in USA, EU, China, India was to converge then ...

2010 GDP (PPP)(1) Population (2)
$ billion                     in billion ppl
EU 15,203                0.500
USA 14,526             0.313
China 11,300            1.340
India 4,058               1.210
World
Total 74,385             6.992

(1) IMF data. Source Wikipedia
(2) Wikipedia

What do these rough numbers tell us? That assuming the total sum GDP of the first 3 remained constant, then
for the GDP (PPP) per capita to converge, the convergence level would be at about 19000 USD. Given that the per capita is now (2010) 46400 in the USA, 30400 in the EU and 8400 in China, that would mean a loss of 27400 per US citizen (in GDP per capita) ie 59% loss, 39% for the EU and +125% for China!

Obviously some of the gains of China will be absorbed by GDP growth but the previous figures give you an idea of the reductions in GDP per capita the EU and especially the US will have to absorb as the GDP per capita of China converges towards the EU and US ones.

Should I add the scenario where India is included too? The level of convergence then becomes 13400 USD, ie 6000 less than the previous scenario. And an even bigger reduction  for the GDPs per capita in the US and the EU!

Should I also add Brazil and Russia? The Asian tigers?

Fasten your seat belts!

Of course this convergence will take time. But how much?
Mind you, GDP adjusted for PPP was used, which is not necessarily the correct approach.

The effects of this convergence are already being seen. The fact that China has so far used its "profits" from trade to invest them in US T-bills, other binds as well as other assets in the US, the EU and elsewhere, has partly eased the effect so far. But is it not delaying the inevitable?

One approach is to say that convergence is only fair. And that what needs to be managed is the transition, the shock for Americans and EUropeans.

Now do you feel a tad more allegiance to the Greeks?

Of course this analysis is based on rough estimates, rough calculations and rough assumptions. But the future is also in any case rough for Americans and EUropeans.

EU: political union or economic colonisation by world powers?

Especially in our era, few if any local issues and dynamics are not intertwined with regional (eg EU) or global issues and dynamics. Unless humanity goes back to countries-fortresses.

In our era's volatile global systemics, a country can always build walls ie become a fortress in an effort to preserve its sovereignty and its distinct ID, be that in culture and "values", laws and their underlying philosophy. Opt out of the global trade "game" and preserve the ownership of its key industries, rely on its own "capital", be it monetary or any in any other form. Not have to rely on the views of the global financial community or follow the rules of the WTO or other international bodies. Every country should have and has that right. But how realistic is that? How can it be self-reliant on energy, foods (at least the basic ones), security, economics, capital, etc? And what size (land, population, GDP, internal market) does this option require?

Shared sovereignty (via a real political union USA or FR of Germany style) is a better option than being colonised (economically etc) by one of the world powers, ie China, India, USA, Russia. This IMO applies to the countries of Europe, South and Central America, and other parts of the world. And the EU and UNASUR (in South America) are "vehicles" of such "shared sovereignty" but which has yet to materialise via proper political union.

Everyone is different, But that is a relative term. To a certain extent every country is different and to a certain extent all countries are the same. Which is more feasible eg a political union between eg Ireland and Greece or one between Ireland and eg South Korea? To a certain extent neither is feasible and to a certain extent both are feasible! We do live in "nothing is impossible" times.

Local, national, regional (eg European) and global citizen identities can well co-exist. The issue is at what level, local, national, regional (EU) or global the Polity is formed. Continent-state is an emerging model in terms of having the potential, via shared sovereignty, to provide an adequate level of self-reliance in energy, foods, defence, have a large enough internal market, economies of scale in many utilities and social welfare (eg a Health Service).

People have indeed tended to group around ethnic, geographical and cultural ties. But these are not static over time. Plus melting pot models have always existed (see eg my post "Globalisation, today and in 300 BC"). The US or even just NYC (or London) is a place where nationalities, languages etc can co-exist in a melting pot under a common polity, currency, laws and language spoken at work. Dozens of languages (337 according to Wikipedia) are spoken in US homes or even homes in NYC, one of the key metropoles of the era (138 languages spoken in Queens, NY)

The alternative is colonisation, driven by economics, by one of the real world powers of the era (China, USA and maybe Russia and shortly, India (*)). A balkanised Europe, with a minimal EU and each member "sponsored" by one of those powers.

(*) Could one count the global financial system as one of those powers?

Systemics and prospects of the WTO and of a USA, EU, Russia, Canada merger!

"Doha Trade Deal Seems Likely" reports the Wall Street Journal on May 31. 2011 (must read, here).

Whether the Doha lite, or in my opinion "extra lite" agenda is agreed upon by the end of the year, or even a "zero" one (ie no deal, end of the round that started in November 2001 in Doha) I do agree with the view that the era of progress in trade multilateralism is probably over.

As I have pointed out in my posts that one can find on this blog, after the 2003 failed Cancun meeting of the WTO, many bilateral and regional trade (or more than just trade) agreements have popped up.

A few days ago (25/5), I posted on what systemics I can see developing post Doha. IMO China, India, the US, the EU (mainly) plus Japan, Russia and Brazil or UNASUR (South America's "EU" project that of course includes Brazil) will be the main "players" in the world economic "arena".

The WTO rules as they stood before the Doha Round of talks in 2001 will probably still exist (although the survival of the WTO is not a given IMO) plus whatever rules come out of the Doha lite agenda that some seem to hope to be concluded (I have my doubts, read the WSJ article for some of the reasons, aka USA, plus. as far as I know, the US Pres has no fast track powers given by Congress on concluding a deal, and if that is indeed so, it is possible that the US Congress may decide to amend (!!) any deal, thus bringing a new deal back to the WTO, etc).

Conclusions

1) Most progress in rules or deals will most likely between 2 or more of the above 4+3 main players.

2) The EU, the US, and the other main players will continue to conclude (or at least try to, see US) bilateral deals with others, in some cases group agreements, regional or not.

3) The EU needs to strengthen its position and a political union of the EU is the main such way.

More:

Here comes some thinking that some may consider sci-fi, but we shall see:

I was involved in a most interesting discussion on Twitter (aka "tweetscussion") with a very esteemed fellow tweeter, @paulstpancras) on the night of May 29 to May 30. At some point, talking of the EU, political union potential, the UK POV, I said: "Or maybe UK would be OK with EU if merged with (the) USA; 77+ states. Then (UK) could ally with Texas, Arizona, etc! :)".

"Or a circumpolar space... USA, Canada, EU, Russia ..." proposed my fellow tweeter, which was exactly what I was also thinking as another potential scenario.

Why, because in addition to covering a ring around the planet, this union would have a population size that starts to approach that of China (1.3 billion) and India (1.2 billion):

USA+CAN+EU+Russia = 0.3 + 0.03 + 0.5 + 0.14 = 0.97 billion people.

In terms of GDP (nominal (in trillion USD) 2010 estimates (Source: CIA, World Factbook)) the picture would then be:

European Union 15.9 + United States 14.6 + Canada 1.6 + Russia 1.5 = 33.6

China 5.7
India 1.4

There is an obvious imbalance between the 33.6 and China's and India's GDP but with their rapid growth the potential for more GDP balance between the three exists.

There is another reason why a USA+EU merger would have to bring in Russia too. Russia would get very itchy if the US and EU were to merge, and including it could fix that. Canada has only 30+ million inhabitants but huge natural resources.

So while one scenario is EU+USA+Russia+Canada, another is EU+USA+Russia with almost the same population as the former, 0.94 billion and 32.0 instead of 33.6 2010 trillion USD.

But is a EU+US merger scenario even a remote possibility? Well, yes and no. 2-3 years ago, when I think the US proposed a free trade deal, some in the European Parliament said, why not a "single market". Well, IMO a single market, even without a common currency, needs single laws, which brings things, again IMO, towards a single legislature, ie political union. IMO the US+EU potential will largely depend on developments in/with China.

But what about the rest of the world? Well, China+India+EU+USA+Russia = almost 3.5 billion people. That leaves out 3.4 billion people (of the 6.9 billion total in 2010). Note: Only 11 countries have population size over 100 million but there are many countries, more than 200 in the world (planet).

Since world GDP was estimated at 62.2 trillion USD in 2010, the result of this scenario would be:

EU+USA+Russia: 32.0

China 5.7

India 1.4

Rest of the world: 23.1

including in that 23.1:

Japan 5.4

Brazil 2.0
Canada 1.6
Australia 1.2
Mexico 1.0

Such a merger could prompt other countries to merge in groups, eg Japan, ASEAN & rest of Asia (with or without some of the ex-USSR states) plus Oceania, Africa, South and Central America. The world would not become a global polity, but a small number of super-countries/states (regionalisation+). Global trade talks would bring to a table reps of 4 to 6 such super-states. Not all of the world's countries would want or be included of course (and why should they, there should be room for exceptions and other approaches).

But in any case, in the complicated and perpetually changing world after 10% of the 21st century has elapsed, and the rapid growth, economic and in "power" of the BRICs as well as other developing countries, the EU has to be a single polity, it cannot continue to be a loose group of 27 countries. EU political union is a must, for the EU to be taken seriously by the rest of the world (see eg recent issues re selection of new IMF chief, the issue of a UN Security Council seat for the EU, the marginal role played by the EU as opposed to the US and China in the Copenhagen COP 15+, etc).

What are France, the UK, Germany and Italy doing in the G8?

This is one of the follow up posts to yesterday's post Key factors of "strength" in "post Doha" (and post WTO?) world systemics and on the occasion of the G8 meeting in Deauville (France), today and tomorrow.

The G8 started as G6 in the 1970s with France, Germany, Italy, Japan, the UK and the United States ie 4 large and "rich" (GDPwise) European countries members of the then EEC plus USA and Japan (also large and rich, see yesterday's post). Canada was invited later, and later Russia.
The EU is an extra, "associate" type of, participant.

My observations and points:

1) With G20 now in existence, what is G8 for?

2) Since the EEC is EU (since the 1990s) what is the point/sense of having France, Germany, Italy and the UK?

3) Considering Canada's population size compared to the other 7, why is it there (plus China and Brazil are in 2010 GDP terms richer than Canada)

4) Why is China (No. 1 in population and No. 2 in GDP) not there?

5) India is marginally less rich than Canada and Russia (1.4 vs 1.6 and 1.6 trillion USD 2010 see yesterday's article).

Hence, and depending of the weigt attached to GDP and population, the G8 should be:

either

A) G4: EU, USA, China and Japan

or

B) G7: EU, USA, China, Japan, India, Russia; plus Brazil (or the UNASUR).

The current G8 seems so 20th century and so globally irrelevant to 2011!

And in any case, EU members states have no place there, the EU does.

See also: Key factors of "strength" in "post Doha" (and post WTO?) world systemics

The American and European good times? Over?

For the comformist portion of the US and European population, the "good times" have ended, one way or another. The reason is that world GDP cannot grow enough to accomodate the fair rise in the GDP of the BRICs et al & maintain the US & European level.

Full European Integration can create enough economies of scale to minimise the shock for Europe. Provided European countries have learned their lesson from the 2 world wars caused by ill European dynamics

Is the "party" over for the developed economies?

Can world GDP grow enough to accommodate deserved growth in the rest of the world while maintaining even current GDP levels in the G7? One could be tempted to predict that the "party" is over for the developed economies and now it's others' turn to prosper! Eg what effect will a 50% rise in GDP/capita of 2.5 bn ppl (China & India) in the near future have on the GDP/capita in US and EU?

Brainstorming on world systemics: The US+EU scenario

US-EU Single Market or merger scenario (Medium Term, at best):

In a world of 7 bn with China 1.3 & India 1.2, the US has not enough size (eg internal
market) to compete or have autarky. Even with Canada.

The EU has less of a size problem (0.5 bn) but its Internal Market not working well (one of the barriers: 20+ languages) and still it is not large enough!

But an US+EU of 0.8 bn (possibly plus Canada) have enough size-population,
resources & compatibility (in prices, costs, various standards, in spite their differences) to be 1 of the 3-4 major entities in world stage later in this century.

Global Dynamics: Agriculture - Industry - Services

China
GDP
composition by sector:
agriculture: 11.9%
industry: 48.1%
services: 40%
note: industry includes construction
(2006 est.)

India

GDP
composition by sector:
agriculture: 19.9%
industry: 19.3%
services: 60.7% (2005 est.)


Japan

GDP - composition by sector:
agriculture: 1.6%
industry: 25.3%
services: 73.1% (2006 est.)


Brazil

GDP - composition by sector:
agriculture: 8%
industry: 38%
services: 54% (2006 est.)

EU
GDP - composition by sector:
agriculture: 2.1%
industry: 27.3%
services: 70.5%
(2006 est.)


USA

GDP - composition by sector:
agriculture: 0.9%
industry: 20.4%
services: 78.6%
(2006 est.)