Charles Kenny is a senior fellow at the Center for Global Development. He has an essay in the Washington Post that is adapted from his new book, “The Upside of Down: Why the Rise of the Rest Is Good for the West.” Charles Kenny agrees with economist Arvind Subramanian that in 2030 the world will have four major economic players: China will be the heavyweight, followed by the United States and European Union, with economies about half as large, and then India close behind.
There are some real economic costs related to losing the top spot in the GDP rankings, but they are small and manageable. The dollar might lose its dominance as the currency of choice for central bank reserves and trading, and some predict that will increase the cost of U.S. borrowing and exporting. In fact, the dollar share of global reserves has already fallen from about 80 percent in the 1970s to about 40 percent today, with the euro and the renminbi gaining ground, but there isn’t much sign that that has spooked global markets.
The upside to the United States of losing the top GDP spot is immense. The country’s declining economic primacy is mainly a result of the developing economies becoming larger, healthier, more educated, more free and less violent. And there is little doubt the United States benefits from that. Just over the past few years, for example, U.S. export markets in Asia, Africa and Latin America have grown rapidly. Three-fifths of America’s exports go to the developing world, and that suggests that about 6 million Americans are employed providing goods and services to emerging markets. As the developing world gets richer, it will import more — and create more jobs here.
The rest of the world is also inventing more stuff, from modular building techniques in China to new drug therapies and low-water cement-manufacturing processes in India to mobile banking applications in Kenya. We can benefit from those inventions as much as we already benefit from foreign innovators coming to the United States.
America’s tenure on top is ending because much of the world is becoming more like America in many ways: richer, more democratic, more secure. The world increasingly shares aspirations, priorities and attitudes similar to ours. This is a success story for U.S. stewardship of the global economy.