Developing economies to eclipse west by 2060: OECD

CHINA, India and the rest of the developing world will eclipse the west in a dramatic shift in the balance of economic power over the next five decades, according to a report of the Organisation for Economic Cooperation and Development (OECD).
The United States is likely to cede its place as the world's largest economy to China as early as 2016 and to India by 2060, said the Paris-based think-tank in its "Looking to 2060: Long-Term Global Growth Prospects" report issued on Friday.
The report, which uses a new economic model, forecasts China will overtake the crisis-hit eurozone this year and the US within the next four years to become the largest economy in the world.
Combined, China and India will soon surpass the collective economy of the G7 nations. Fast-ageing economic heavyweights, such as Japan and the euro area, will gradually lose ground on the global GDP (gross domestic product) table to countries with a younger population, like Indonesia and Brazil.
The report clearly indicates that the balance of economic power will shift over the next half century.
After recovery from the current crisis, global GDP could grow around 3 percent a year on average in the next half a century. Growth in the 34-nation OECD area is projected at about 2 percent annually to 2060, with declining rates in many high-income countries.
On the basis of 2005 purchasing power parities (PPPs), the US is the largest economy at present, accounting for around 23 percent of global output, but it will be exceeded by China, perhaps as soon as 2016. The combined GDP of China and India will soon surpass that of the G-7 economies, and will exceed that of the entire current OECD membership by 2060.
India is projected to surpass Japan in the next year or two and the Euro area in about 20 years, says the report.
China and India will experience more than a seven-fold increase in their income per capita by 2060. The extent of the catch-up is more pronounced in China reflecting the momentum of particularly strong productivity growth and rising capital intensity over the last decade. This will bring China 25 percent above the current (2011) income level of the United States, while income per capita in India will reach only around half the current US level.
Additionally, in a few European OECD countries and some emerging economies differences in labour input will also continue to explain a sizeable share of the remaining income gaps. Indeed, for some European countries, where ageing is more pronounced and/or older-age participation rates are low, these factors are enough to cause a widening in the income gap with the United States, despite continued convergence in productivity and skills levels.