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India poised for fastest growth in coming decade
24 Dec '15
3 min read
India has the potential to be the fastest growing economy over the coming decade, according to new growth projections presented by researchers at the Center for International Development at Harvard University (CID).
The researchers use their newly updated measure of economic complexity, which captures the diversity and sophistication of productive capabilities embedded in a country's exports, to generate the growth projections. The projections reflect the latest 2014 trade data available. The global landscape for economic growth that results shows greatest potential for rapid growth in South Asia and East Africa. Conversely, oil economies and other commodity-driven economies face the slowest growth outlook, the Harvard Kennedy School (HKS) said on its website.
India tops the global list for predicted annual growth rate for the coming decade, at 7 per cent. This far outpaces projections for its northern neighbor and economic rival, China, which the researchers expect to face a continued slowdown to 4.3 per cent growth annually to 2024.
“India has made important gains in productive capabilities, allowing it to diversify its exports into more complex products, including pharmaceuticals, vehicles, even electronics,” said Ricardo Hausmann, Professor of the Practice of Economic Development at HKS, the leading researcher of The Atlas of Economic Complexity and the director of CID.
Hausmann notes these gains in economic complexity have historically translated into higher incomes. “China has already realized many of these gains, doubling per capita income in less than a decade. We expect that India's recent gains in complexity, coupled with its ability to continue improving it will drive higher incomes, positioning India to lead global economic growth over the coming decade,” Hausmann said.
Growth in emerging markets is predicted to continue to outpace that of advanced economies, though the gap is closing. The CID projections are also bullish on East Africa. Five East African countries, which include Uganda, Tanzania, and Kenya, rank in the top ten, with all predicted to grow at least 5.5 per cent annually. The growth forecast also looks favorably on Southeast Asia, where the Philippines, Malaysia, Indonesia, and Vietnam look to drive growth well above global averages. Growth in advanced economies remains slow by comparison, though it has risen slightly in the projections in recent years. The US is expected to grow at 2.8 per cent annually to 2024, with higher growth predicted in the UK and Spain, and slower growth in Italy and Germany.
The projections are based on a decade of research into the relationship between measures of economic complexity and growth, which, the researchers argue, isolates a consistent fact: countries that diversify their productive knowhow beyond what is expected by their income tend to grow faster. Economic complexity shows remarkable accuracy in explaining differences in countries' income levels—and in predicting future economic growth, with much greater accuracy than the World Economic Forum's Global Competitiveness Index. (SH)
The researchers use their newly updated measure of economic complexity, which captures the diversity and sophistication of productive capabilities embedded in a country's exports, to generate the growth projections. The projections reflect the latest 2014 trade data available. The global landscape for economic growth that results shows greatest potential for rapid growth in South Asia and East Africa. Conversely, oil economies and other commodity-driven economies face the slowest growth outlook, the Harvard Kennedy School (HKS) said on its website.
India tops the global list for predicted annual growth rate for the coming decade, at 7 per cent. This far outpaces projections for its northern neighbor and economic rival, China, which the researchers expect to face a continued slowdown to 4.3 per cent growth annually to 2024.
“India has made important gains in productive capabilities, allowing it to diversify its exports into more complex products, including pharmaceuticals, vehicles, even electronics,” said Ricardo Hausmann, Professor of the Practice of Economic Development at HKS, the leading researcher of The Atlas of Economic Complexity and the director of CID.
Hausmann notes these gains in economic complexity have historically translated into higher incomes. “China has already realized many of these gains, doubling per capita income in less than a decade. We expect that India's recent gains in complexity, coupled with its ability to continue improving it will drive higher incomes, positioning India to lead global economic growth over the coming decade,” Hausmann said.
Growth in emerging markets is predicted to continue to outpace that of advanced economies, though the gap is closing. The CID projections are also bullish on East Africa. Five East African countries, which include Uganda, Tanzania, and Kenya, rank in the top ten, with all predicted to grow at least 5.5 per cent annually. The growth forecast also looks favorably on Southeast Asia, where the Philippines, Malaysia, Indonesia, and Vietnam look to drive growth well above global averages. Growth in advanced economies remains slow by comparison, though it has risen slightly in the projections in recent years. The US is expected to grow at 2.8 per cent annually to 2024, with higher growth predicted in the UK and Spain, and slower growth in Italy and Germany.
The projections are based on a decade of research into the relationship between measures of economic complexity and growth, which, the researchers argue, isolates a consistent fact: countries that diversify their productive knowhow beyond what is expected by their income tend to grow faster. Economic complexity shows remarkable accuracy in explaining differences in countries' income levels—and in predicting future economic growth, with much greater accuracy than the World Economic Forum's Global Competitiveness Index. (SH)
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