Back in the 70s and 80s, people from various countries flocked to the United States to chase the so-called ‘American Dream’ of economic opportunity and social mobility. Long seen as the land of opportunity, the U.S. was an attractive destination especially for those fleeing economic difficulties and political instability in their home countries.Today, however, the tables have turned. Westerners are building their startups and chasing the digital nomad life in continents like Asia and Africa. People from countries considered to be emerging economies are actively looking for new ways to uplift themselves and their communities without uprooting themselves. This shift away from a country, long considered a major superpower, leads us to question what being an economic superpower in this day and age even means, and what these shifts mean for the future of the global economy.
The Role of the Economic Superpowers-That-Be
Originally formed to address the recession and oil crisis in the 1970s after the height of the Cold War, the highly-exclusive and relatively homogenous nations that make up the G7 group typically concern themselves with global economic and financial cooperation, while maintaining a strong interest in security issues and conflict prevention. The diverse G20, on the other hand, was established in 1999 to forge cooperative ties between the G7 super-club and countries considered to still be in the developing stage.
The large GDPs, strong military, and global influence of the G7 group have led to their position as the dominant economic superpowers. However, this position was based on the Cold War era, when the world was divided into two rival blocs. In the post-Cold War era up to the present day, the landscape of economic superpowers have become more complex, as the factors that contribute to a country's economic power are constantly evolving. Take Russia’s formal inclusion in the G7 economic supergroup by 1998, for instance; despite not having a fully liberalized economy, nascent indicators of progress and moderate engagement with the G7 nations led to Russia’s integration, with G7 becoming known as G8.
There is one thing, however, that has more or less remained the same: Historically, once a nation attains membership in the economic super-club, extrication becomes a formidable challenge. In fact, apart from Russia’s suspension in 2014 following the annexation of Crimea, no nation has ever fallen off the wagon, so to speak, after finally ascending to economic superpower recognition.
This brings us to a point of contention that many media outlets and think tanks have repeatedly brought up throughout the past decade: China’s supposed waning influence in the face of the United States’ economic and military domination.
Superpower Tensions
In recent years, China has gone from being an emerging market to an influential economy known for technological advancements and modern infrastructure development. Its ‘Belt and Road Initiative’ (BRI), initiated in 2013, has committed more than a trillion dollars for global infrastructure, which has contributed greatly to increased trade and economic stimulation, ultimately strengthening relationships and influence.
However, despite these markers of progress and growth, China's influence has been reported to be on the decline, particularly in terms of economic competence and cultural influence.
Meanwhile, the U.S. is portrayed as constantly in the #1 superpower position, considering its economic and defence ties in Asia, even as it faces the following major challenges:
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Massive income and wealth inequality, considered to be higher than in almost any other developed country (and still rising).
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A declining middle class.
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A growing national debt.
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A widening skills gap.
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A political system that is increasingly polarized and gridlocked.
There is also the continuous focus on building military might at the expense of health and education; on a 2023 list of countries ranked by military spending by the Stockholm International Peace Research Institute, the U.S. ranked first, having spent more than the next 10 countries on the list combined — $877 billion in 2022, compared with $292 billion in reported spending by China.
These challenges have led some to question the veracity of the U.S. still being considered the world's leading superpower. In fact, given the various issues that plague the United States, a more pertinent inquiry might be whether China's supposed decline transpires prior to that of the U.S.A.
At this rate, in a few decades, the United States may just as well get left behind on the global economic stage. This is not to say that China has not made judgement calls that affect its status; its ageing population and the impact of growing tension with other nations cannot be ignored. But while these might slow it down somewhat, they are not enough to cast the country out of the economic grouping. It's simply too big a wagon to be shaken.
Despite not being grouped with the G7, China has caught up and become a major economic powerhouse by itself, and in its own way contributed to uplifting its neighbours. And China is not the only nation on this path - multiple nations are poised to ascend to economic superpower status like India, Brazil, Australia, Mexico, among others.
Which begs the question: Is it not time to rethink the existence of these exclusive super-clubs, especially given the economic realities of this day and age?
Call for a New Perspective
Traditionally, economic power was measured using the emerging vs first world divide. This divide is based on the idea that there are two distinct categories of countries: those that are emerging economies, and those that are developed economies.
The emerging economies are typically characterised by rapid economic growth, high levels of poverty, and a large youth population. The developed economies are characterised by high levels of income and wealth, a well-educated population, and a stable political system.
However, this divide is becoming increasingly outdated. Many emerging economies are now growing faster than developed economies, and they are also making significant progress in terms of poverty reduction and education.
For instance, China is now the world's second largest economy, and has lifted millions of people out of poverty in recent decades. Chinese technological advances are making waves in terms of efficiency, cost savings, and connectivity. They also have a literacy rate of over 95%, which is higher than the 79% literacy rate of adults in the United States.In terms of infrastructure, China’s transportation system is considered one of the best, with the Beijing-Shanghai high-speed rail line and the Beijing Capital International Airport being some of the busiest places in the world. The United States, on the other hand, has seen its infrastructure deteriorate in recent years, with its transportation system in need of a major overhaul. While the Chicago O’Hare airport is still considered the second busiest in the world, it's in dire need of modernisation. The American public transportation system also leaves a lot to be desired — in fact, only 5% of Americans commute to work compared to 25% of Europeans.
On the healthcare front, the United States is known for having the highest healthcare costs in the world, with over 28 million Americans uninsured and an average annual health cost per capita around the $12,555 mark per person in 2022. Healthcare quality in the United States also suffers from vast disparities, with a few having access to excellent care while most of the population struggles with substandard care. For a country considered to be at the top of the pecking order, the U.S. ranks 37th in the world in terms of life expectancy, partly attributable to healthcare costs. In contrast, approximately 95% of Chinese citizens have public health insurance, with much lower healthcare costs per capita.
While countries like South Korea, Brazil, and Indonesia may not have the GDP and military might to match these much larger countries, they each have their own strengths and innovations that validate their potential. South Korea in particular has a 99% literacy rate, with several electronics, cosmetics, and automotive giants spearheading technological advancements and economic progress. It is also a member of the OECD (Organisation for Economic Cooperation and Development) — an indicator that other developed economies consider South Korea to be developed as well, in spite of it not being part of the G7 super-club.
With the landscape of economic superpowers undergoing rapid evolution, it’s high time we move away from the idea of exclusive groupings, and instead focus on building a more inclusive global economy. A shift to regional groupings similar to the ASEAN (Association of Southeast Asian Nations) that bolster each other on the economic and technological innovation front may be beneficial, as a regional approach allows for fairer economic comparisons. Also, while traditional measures of economic power like GDP and military spending may still hold some value, these are no longer an adequate benchmark for progress; a better reference could be more inclusive measures like literacy rates, life expectancy, and access to healthcare.
In the 21st century, there is no need for a single economic superpower to dominate the global economy — in fact, there never has been. By rethinking our approach to global economic governance, we can create a system or institution that is more equitable, where all countries have a voice and an opportunity to shape the global economy.Vijay Eswaran is an entrepreneur, speaker, and philanthropist. He is the Founder and Executive Chairman of the QI Group of Companies, a multi-business conglomerate with headquarters in Hong Kong, offices in more than 25 countries and customers in over 100 countries. Eswaran is also the author of Two Minutes From the Abyss. Other works by Eswaran can be found on his website.
