The Bloomberg New Economy Forum today launched a first-of-its-kind index, covering 114 economies accounting for 98% of global GDP. The New Economy Drivers and Disrupters Report introduces a new benchmark that for the first time measures competitiveness against the new disruptive forces sweeping the global economy: automation, digitization, climate change, protectionism, and populism.
“In the New Economy, traditional ways of measuring competitiveness no longer tell the whole story. From protectionism to climate change, new disruptive forces are upending assumptions about how economies grow and reshuffling the pattern of winners and losers. This report brings transparency to the obstacles economies face, showing who is positioned for success, and who is not,” said Tom Orlik, Chief Economist, Bloomberg Economics.
Bloomberg defines the New Economy as the shift in global economic power, from the traditional seats of power in Europe and North America to emerging economies spanning Asia, Africa, the Middle East, and Latin America. The New Economy Drivers and Disrupters Report highlights the complex challenges that come with this shift in power and concludes that the new economies are poorly positioned for the new disruptive forces. The ‘catch up’ process – which has defined the global economy for the last 50 years, with low-income economies narrowing the gap with high-income – isn’t over. It will become more complicated.
Key findings from the report include:
- The next stage of China’s development will be harder than the last: On the traditional drivers of development, China outperforms most economies. With the rapid modernization of infrastructure, advances in education, and investment in research and development, it’s the fourth-ranked overall and the highest-ranked emerging market. On the disruptive forces reshaping the world economy, from protectionism to climate change, it’s much less well positioned, ranking 50th.
- In terms of economic opportunity, India today looks similar to China at the beginning of its boom: Favorable demographics and a far-reaching reform agenda have the potential to super-charge growth. However, there is a barrier to rapid development – the country is even more exposed to disruptive forces than China, as it is ranked 80th. In an age of disruption, late developers will have a more difficult time catching up.
- Vietnam and Asia’s fourth wave: In Asia, exporting has been the path to prosperity. First Japan, then Korea, then China grew by leveraging their low labor costs to claim global market share. Vietnam has the potential to be part of the fourth wave of development. With a global tilt toward protectionism, however, the export path to prosperity is becoming more difficult to follow. Vietnam ranks 73rd on disrupters.
- Loose BRICS: For more than a decade, the BRICS (Brazil, Russia, India, China, and South Africa) have embodied hopes for emerging market economies. Bloomberg’s Index shows that, with the exception of China, they have yet to deliver on their potential. With work still left to do on optimizing traditional drivers of development, the BRICS will have additional difficulty managing the coming disruptive forces of the new economy.
- Disrupting the Advanced Economies: For major advanced economies, the right policy response to disruptive forces will make the difference between extending prosperity and slumping growth. In the U.K., breaking ties with the world’s biggest trade zone could cost 7% of GDP over the next ten years. In the U.S., an immigrant-enhanced workforce and trade-boosted gains in productivity could support annual GDP growth at 2.7% in the next decade. Without them, growth could slump to 1.4%. Germany and Singapore showcase the capacity of high-income countries to manage disruptive forces. Singapore tops our rankings on the digital economy. Germany’s strong institutions and highly educated workforce provide a bulwark against risk.
The report includes a series of interactive data visualization graphics that show how economies are positioned relative to their peers, along with the rankings based on the drivers and disrupter metrics. Case studies include:
- “Vietnam is a Trade War Winner. Now It Has To Figure Out How to Stay Ahead”
- “Mini-Loans Have Spurred A Business—And Debt—Boom in China”
- “Zambia Faces an Electricity Crisis From Global Warming”
- “Poland’s Businesses Are Running Out of Workers”
A series of subsequent case studies will launch weekly leading up to the New Economy Forum.
The New Economy Drivers and Disrupters Report evaluates 114 economies on two sets of metrics. One captures the traditional drivers of development, while the other captures exposure to the disruptive forces creating new risks and opportunities in the new economy. The drivers consist of a composite gauge of productivity, projected growth in the labor force, the scale and quality of investment, and a measure of distance from the development frontier. The disrupters gauge economies’ positions in relation to populism, protectionism, automation, digitization, and climate change.
The indices were developed by Tom Orlik, Scott Johnson, and Alex Tanzi of Bloomberg Economics, drawing on data from official, academic, and market sources. Michael Spence, Nobel laureate in economics, advised on the report.
The New Economy Drivers and Disrupters Report is a proprietary report created by Bloomberg Economics for the New Economy Forum. The forum, co-hosted by Bloomberg and the China Center for International Economic Exchanges is being held in Beijing on November 20-22, 2019, bringing together the world’s most influential business leaders and government officials from more than 60 countries to drive public-private partnerships and action. New economy leaders will convene in China to address the forces of disruption challenging the new economy and catalyze solutions that impact change.
For more details about the New Economy Forum, visit neweconomyforum.com. To join the conversation and stay up-to-date on the forum, follow us on Twitter, Facebook, and LinkedIn, WeChat, and Weibo using #NewEconForum.
