China, Vietnam, Uganda, Indonesia, and India are projected to be among the fastest-growing economies to 2030. That is the conclusion of researchers at the Growth Lab at Harvard University who presented new growth projections in the Atlas of Economic Complexity. The release provides the first detailed look at 2020 trade data, including major disruptions to tourism and transport vehicle exports from the global pandemic.
As the effects of the pandemic dissipate, long-term growth is projected to take off between Asia, Eastern Europe, and East Africa. China is expected to be the fastest growing economy per capita, even if the projection finds growth to be slowing from what the country achieved over the past decade. The research finds that countries that have diversified their production into more complex sectors, like Vietnam and China, are those who will experience the fastest growth in the coming decade.
The Growth Lab researchers released new country rankings of the Economic Complexity Index (ECI), which captures the diversity and sophistication of the productive capabilities embedded in the exports of each country. Despite the trade disruption of the pandemic, countries’ economic complexity rankings remain remarkably stable. The ECI ranking finds the most complex countries in the world held steady with, in order, Japan, Switzerland, Germany, South Korea, and Singapore at the top. Other notable countries include the United Kingdom at 10th, the United States at 12th, China at 16th, and Italy at 17th. The measure of economic complexity is able to closely explain differences in country income levels.
Among the most complex countries, the greatest improvements in the rankings for the decade ending in 2020 have been made by the Philippines (ECI: 30th), China (16th), and South Korea (4th). Those developing economies that have made the greatest strides in improving their complexity include Vietnam (51st), Cambodia (72nd), Laos (89th), and Ethiopia (97th). Those countries that show the fastest declines in the complexity rankings in the past decade have become increasingly dependent on commodities or failed to diversify their exports, namely Botswana (111th), Zimbabwe (114th), Ecuador (119th), and Cuba (120th). Among the most complex countries, France (19th) fell the most, having lost six positions in the ranking.
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Economic Growth Projections: The article discusses projections for the fastest-growing economies up to 2030. The Growth Lab at Harvard University is a reputable source for economic growth projections. They use various economic models and historical data to make these forecasts. Economic growth projections are essential for businesses, investors, and policymakers to plan for the future.
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Impact of the Pandemic: The article mentions the significant disruptions caused by the global pandemic, particularly in tourism and transport vehicle exports. This reflects the pandemic's broad economic impact, which led to contractions in various sectors worldwide. Such disruptions highlight the interconnectedness of the global economy and the need for resilience in economic planning.
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Regional Growth: The article suggests that long-term growth is expected to accelerate in Asia, Eastern Europe, and East Africa as the effects of the pandemic diminish. These regions have been focal points for economic development and investment, with countries like China and Vietnam serving as prime examples of rapid economic growth in Asia.
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Economic Complexity Index (ECI): The ECI is a measure of a country's economic complexity and productive capabilities embedded in its exports. It assesses a country's ability to diversify its production into more sophisticated sectors. Countries with higher ECI rankings are often better positioned for sustained economic growth, as they have a broader range of productive capabilities.
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Complex Countries: The article lists the most complex countries in terms of economic capabilities, with Japan, Switzerland, Germany, South Korea, and Singapore at the top. These countries are known for their advanced industrial and technological sectors, contributing to their high income levels.
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Economic Diversification: The article highlights that countries like Vietnam and China, which have diversified their production into more complex sectors, are projected to experience faster growth. Economic diversification is a strategy that involves expanding a country's economic activities beyond traditional sectors, reducing reliance on a single industry or commodity.
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Improvements in Complexity Rankings: It mentions that some developing economies, including Vietnam, Cambodia, Laos, and Ethiopia, have made significant strides in improving their complexity rankings. This indicates their progress in building more diverse and sophisticated export portfolios, which can drive economic development.
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Declining Complexity Rankings: On the other hand, countries like Botswana, Zimbabwe, Ecuador, and Cuba have seen declines in their complexity rankings. This decline often results from overreliance on commodities or a failure to diversify their exports. Such countries may face challenges in achieving sustained economic growth.
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France's Decline: The article also notes that France experienced a significant decline in its complexity ranking. This highlights the importance of ongoing efforts to enhance economic capabilities and competitiveness, even for well-developed economies.
In summary, the article provides insights into the dynamics of global economic growth, the impact of the pandemic, and the role of economic complexity in driving prosperity. The Growth Lab's Economic Complexity Index is a valuable tool for assessing a country's economic potential and understanding its growth prospects.
