Power Follows Wealth
Power Follows Wealth:
Many years ago, Legendary Investor Jim Rogers told me that Power follows Wealth. A brief look at history confirms his thesis. We all know that empires were built when massive fortunes were accumulated and eventually collapsed when their inevitable economic dominance ended. Over time, capital begins to flow away from one area of the globe and to another area. Over the two decades or so, he argues that capital is quietly flowing away from the “West” and migrating towards “East.” His logic would conclude that it is only a matter of time until global power follows the money and “shifts” from the West to the East. Whether or not that happens, and the speed in which that happens, is yet to be determined. This article, which is based on HSBC’s report, projects a massive shift in the global economic landscape by 2050. It suggests that it is only a matter of time until the East surpasses the West as the dominate world economic power.
In fact, 60% of the top 5 economies in 2050 will be in Asia:
HSBC 2050 list of top economies (change in rank from 2010)
1) China (+2)
2) U.S. (-1)
3) India (+5)
4) Japan (-2)
5) Germany (-1)
What Does This Mean For You?
I prefer to focus my attention on how to allocate capital right now, not in 50 years. Right now, the West remains the dominate Economic and Military power on the planet- bar none. Until that changes, and it is now longer called the American Dream, there remain countless opportunities to prosper and thankfully they are located in front of us each and every day. It is our job to find them.
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Full article below:
(CNN) – The global research department of HSBC has released a report predicting the rise and fall of the world’s economies in the next 40 years.
The world’s top economy in 2050 will be China, followed by the United States. No surprises there – since China’s reforms in the 1980s, economists have said it’s not a question of if, but when, China’s collective economic might will top the U.S.
But among the smaller, developing nations, there are several surprises by HSBC prognosticators:
* By 2050, the Philippines will leapfrog 27 places to become the world’s 16th largest economy.
* Peru’s economy, growing by 5.5% each year, jumping 20 places to 26th place – ahead of Iran, Colombia and Switzerland. Other strong performers will be Egypt (up 15 places to 20th), Nigeria (up nine places to 37th), Turkey (up six spots to 12th), Malaysia (up 17 to 21st) and the Ukraine (up 19 to 45th).
* Japan’s working population will contract by a world-top 37% in 2050 – yet HSBC economists predict it will still be toward the top performing economies, dropping only one spot to the 4th largest economy. India will jump ahead of Japan to 3rd on the list.
* The big loser in the next 40 years will be advanced economies in Europe, HSBC predicts, who will see their place in the economic pecking order erode as working population dwindles and developing economies climb. Only five European nations will be in the top 20, compared to eight today. Biggest drop will be felt northern Europe: Denmark to 56th ( -29), Norway to 48th ( -22), Sweden to 38th (-20) and Finland to 57th (-19).
HSBC 2050 list of top economies (change in rank from 2010)
1) China (+2)
2) U.S. (-1)
3) India (+5)
4) Japan (-2)
5) Germany (-1)
6) UK (-1)
7) Brazil (+2)
8) Mexico (+5)
9) France (-3)
10) Canada (same)
11) Italy (-4)
12) Turkey (+6)
13) S. Korea (-2)
14) Spain (-2)
15) Russia (+2)
16) Philippines (+27)
17) Indonesia (+4)
18) Australia (-2)
19) Argentina (2)
20) Egypt (+15)
21) Malaysia (+17)
22) Saudi Arabia (+1)
23) Thailand (+6)
24) Netherlands (-9)
25) Poland (-1)
26) Peru (+20)
27) Iran (+7)
28) Colombia (+12)
29) Switzerland (-9)
30) Pakistan (+14)
“If we step away from the cyclicality, there are two ways economies can grow; either add more people to the production line via growth in the working population, or make each individual more productive,” the report says.
In other words, demographics – the size of your working population – along with the opportunities to flex that muscle help determine long-term economic trends. Big factors on the back half of that equation: Education opportunities, democratic governments or strong rule of law (a caveat that explains China and Saudi Arabia’s high placement).
“We openly admit that behind these projections we assume governments build on their recent progress and remain solely focused on increasing the living standards for their populations,” the report says. “Of course, this maybe an overly glossy way of viewing the world.”
Chief factors that may derail economies moving forward, the report says: War, energy consumption constraints, climate change, and growing barriers to population movement across borders.
Source: http://business.blogs.cnn.com/2012/01/12/worlds-top-economies-in-2050-will-be/?sr=sharebar_facebook
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