&
From rising tariffs to rising temperatures, low- and
middle-income economies face new challenges
19
Bloomberg Businessweek � Trade November 4, 2019
By Tom Orlik, Scott Johnson,
and Alex Tanzi
Twenty years ago, China’s
economy was one-tenth the
size of the U.S.’s. In 2019 it’s
two-thirds as big. Based on
the current trajectory, in
2039 it will be more than 10%
larger. India will have leap-
frogged Japan and Germany
to claim the No. 3 spot in
global rankings. Vietnam will
be closing in on the top 20.
Or not.
Disruptive forces are
sweeping the global economy.
Populist regimes are throw-
ing out the policy rulebook.
Protectionism is choking the
trade flows that fueled China’s
rise. Automation and the
digital economy are increas-
ing productivity for some,
eroding old sources of advan-
tages for others. The threat of
climate change looms.
The path to prosperity
taken by successful coun-
tr ies such as South Korea
and Japan is increasingly
hard to follow. From Beijing
to Brasília, getting the right
mix of smart investment, a
skilled workforce, capacity
for innovation, and effec-
tive governance is already
tough. Combating forces—
whether protectionism
or climate change—that
threaten to have an out-
size impact on low- and
middle-income countries
adds to the challenge.
Bloomberg Economics’
Drivers and Disrupters report
captures the forces nar-
rowing the path to devel-
opment and upending the
pattern of winners and losers
in the global economy. The
report covers 114 economies
accounting for 98% of global
gross domestic product. It
gauges their performance
on the traditional drivers
of development: investment,
labor force, and productivity.
Uniquely, it also tracks the
disruptive forces that prom-
ise to redraw the global econ-
omy’s pattern of winners and
losers: automation, climate
change, digitization, popu-
lism, and protectionism.
Drawing on a variety of
data, we build a set of indexes
to rank countries from best
to worst on traditional driv-
ers and new disrupters of
economic prosperity. The
main finding: Catching up
is getting harder. Low- and
middle-income countries are,
in general, poorly positioned
to adapt to disruptions.
Without an early, ambitious
response forged at national
and international levels, the
number of nations moving
from low- to middle-income
status and then on to high-
income—already limited—
could dwindle further.
Take China. Measured
by traditional drivers
of development, it
Dis rupters
⊲
19
Bloomberg Businessweek � Trade November 4, 2019
By Tom Orlik, Scott Johnson,
and Alex Tanzi
Twenty years ago, China’s
economy was one-tenth the
size of the U.S.’s. In 2019 it’s
two-thirds as big. Based on
the current trajectory, in
2039 it will be more than 10%
larger. India will have leap-
frogged Japan and Germany
to claim the No. 3 spot in
global rankings. Vietnam will
be closing in on the top 20.
Or not.
Disruptive forces are
sweeping the global economy.
Populist regimes are throw-
ing out the policy rulebook.
Protectionism is choking the
trade flows that fueled China’s
rise.Automationandthe
digital economy are increas-
ing productivity for some,
eroding old sources of advan-
tagesforothers.Thethreatof
climatechangelooms.
Thepathtoprosperity
takenbysuccessfulcoun-
tr
a
hardtofollow.FromBeijing
toBrasília,gettingtheright
mix of smart investment, a
skilled workforce, capacity
for innovation, and effec-
tive governance is already
tough. Combating forces—
whether protectionism
or climate change—that
threaten to have an out-
size impact on low- and
middle-income countries
adds to the challenge.
Bloomberg Economics’
Drivers and Disrupters report
captures the forces nar-
rowing the path to devel-
opment and upending the
pattern of winners and losers
in the global economy. The
report covers 114 economies
accounting for 98% of global
gross domestic product. It
gauges their performance
on the traditional drivers
of development: investment,
labor force, and productivity.
Uniquely, it also tracks the
disruptive forces that prom-
ise to redraw the global econ-
omy’s pattern of winners and
losers: automation, climate
change, digitization, popu-
lism, and protectionism.
Drawing on a variety of
data, we build a set of indexes
to rank countries from best
to worst on traditional driv-
ers and new disrupters of
economicprosperity.The
mainfinding: Catching up
is gettingharder.Low-and
middle-income countries are,
in general, poorly positioned
to adapt to disruptions.
Without an early, ambitious
response forged at national
and international levels, the
number of nations moving
from low- to middle-income
statusandthenontohigh-
income—already limited—
could dwindle further.
TakeChina.Measured
bytraditionaldrivers
ofdevelopment, it
Dis rupt
⊲
