It was 2005, and the young Chinese man had parked his beast of a vehicle, a cherry-red Hummer with big fog lamps and tires the size of Nebraska, at a busy intersection in downtown Shanghai. As he sat in the driver's seat, his fellow Chinese passed and marveled.
"What a beautiful machine," a reporter yelled up to the driver.
The man looked down, pointed to the hood and responded simply:
"Turbocharged."
There were many events that grabbed world headlines in this first decade of the 21st century: the Sept. 11, 2001, terrorist attack on the U.S.; the wars in Afghanistan and Iraq that followed; natural disaster in Asia; financial intoxication, and the subsequent global purge and crash.
But a good argument can be made that Hummer Man, poster child for new affluence, embodies the more fundamental story of our times -- and the far more dominant and lasting force affecting world affairs.
Across the globe, economic and political liberalization reached critical mass in recent years, propelling hundreds of millions of people up the income curve, and unleashing a flood of ambition and aspiration. A force that started to build in 1978 in China, 1991 in India, and more recently in many other developing economies, is now indeed turbocharged.
Over the past decade, the number of households with annual disposable income of more than $10,000 rocketed in countries as diverse as Algeria, Brazil, Kazakhstan and Poland. China zoomed past Japan and the U.S. to become the largest market for auto sales. Cellphone subscriptions in India rose 240-fold, a rate outpaced by Syria, Vietnam, Kenya and a number of other nations, says Euromonitor International, a research firm.
In fact, technology played a special role firing growth through the decade. New free-trade agreements helped many poor nations expand. So did better economic management and liberalized rules for business. But it is technology that has been a great equalizer.
"Technological breakthroughs such as the Internet and cellphones have helped regions like Africa become connected," says William Easterly, an economist at New York University. "Kenya suddenly figured out it could capture the European market for cut flowers by using the Internet" to buy and sell, he says. "It's just dynamic Kenyan entrepreneurship."
The World Bank suggests that the global economy could expand in size to $72 trillion by 2030 from $35 trillion in 2005, spurred by developing countries. Under that scenario, the Bank estimates that by 2030, 1.2 billion people in developing nations will be part of what it terms the global middle class. That's three times the number today.
What's the bigger upside of all this economic enfranchisement? "At some point, when you have a sufficiently large middle class -- that's the key to sustained good government," says Nancy Birdsall, president of the Center for Global Development, a research organization in Washington. "It's the middle class that demands a competitive system, property rights, the rule of law, an economic setting where they can compete, where they aren't fighting the insider privileges that are associated with developing economies."
But upside is in the eye of the beholder. New economic powers are rising abroad. They will continue to take jobs away from higher-cost developed countries. They will demand more political influence. And they will grab a fatter slice of high-end innovation -- the lucrative part of the global market that the U.S. and the developed world have considered their own.
Andrew Liveris, chief executive of Dow Chemical Co., sounds the warning a different way. At employee gatherings in the U.S., he asks who has children studying to become engineers. A few hands go up, he says. When he asks the question at Dow gatherings in China and India, a forest of arms wave in the air.
There are other points of angst along the road to economic integration. Robust expansion can be followed by great dysfunction, as the past two years of financial crisis have shown. Environmental damage and income inequality are ever-present threats to stability. And protectionism is straining at the leash in Congress and parliaments across the globe. Another spike in unemployment could well set it loose.
Still, expect the momentum that has built over the past 10 years to speed straight into the next decade. Aspiration begat Hummer Man, and by the end of the decade it had consumed the brand as well: A Chinese company bought the vehicle from General Motors Co.
It also propelled men like Zhang Jingyi into this new world -- the fuel for future global growth. It was the latter part of the decade, and Mr. Zhang was sitting outside the Beijing Railway Station, his possessions in a single canvas bag. His was a typical story of the times. Like migrants in Latin America, Africa and Central Europe, Mr. Zhang had come to the city to find a better life. "I need to earn more money to pay for my son's education," he said.
And behind him, waiting for their chance to plug into the grid: roughly 700,000 Chinese, still on the farm, with growing aspirations of their own.
source: http://online.wsj.com/article/SB126136183668499643.html
