We often think of India as an emerging economy (it wasn’t long ago that it was referred to as ‘third world’), but did you catch this news last week? https://www.bbc.co.uk/news/world-asia-india-65380148
We won’t ever know the exact date or the precise baby who tipped the scales, but very roughly it now appears that India has overtaken China in terms of population.
It’s been a good couple of years for India in league table terms – in 2022, it overtook the UK in terms of total size of economy – becoming the fifth largest economy in the world.
But, with the right lens applied, this can be seen as just a return to normal for India, after a temporary blip in form.
Looking over 2000 years gives a sense of that … India is in Orange (note that the below chart compresses the first 1500 years due to lack of available data):
Source: “Statistics on World Population, GDP and Per Capita GDP, 1 -2008 AD, Angus Maddison, University of Groningen/7IM
Up until 1700 (the white line on the chart), India was the richest place on Earth, representing about a quarter of global GDP.
For most of human history, economics equalled demographics. The more workers a country had – the more farmers, smiths, hunters etc - the more output it would create. People = power.
Then the industrial revolution came. Suddenly, one man with a machine could do the work of hundreds. And Western economies – the ones with the machines – boomed. It saw two and a half centuries of dominance of small populations over larger ones (sometimes in pretty distasteful ways – although we don’t want to go into a debate about empire/colonialism).
But those 200-year-old benefits are starting to fade. Technology has started to give economic power back to individuals – which means population is starting to matter again.
And by 2050, the top 10 most populated countries will likely include current economic minnows such as Ethiopia, Pakistan, and the Democratic Republic of Congo … Maybe the world order is about to change once again.
I hope you have found this interesting but, if you have any questions about this piece or any other finance related matter, please do not hesitate to get in touch.
Yours sincerely,
Graham Ponting CFP Chartered MCSI
Managing Partner
