May 17 – China and India are expected to become the largest investors among developing nations, and will combine to account for roughly 38 percent of global gross investments in 2030, according to the World Bank’s newly released Global Development Horizons (GDH) report, titled “Capital for the Future: Saving and Investment in an Interdependent World.”
“GDH is one of the finest efforts at peering into the distant future. It does this by marshaling an amazing amount of statistical information,” said Kaushik Basu, the World Bank’s Senior Vice President and Chief Economist. “We know from the experience of countries as diverse as South Korea, Indonesia, Brazil, Turkey and South Africa the pivotal role investment plays in driving long-term growth. In less than a generation, global investment will be dominated by the developing countries. And among the developing countries, China and India are expected to be the largest investors, with the two countries together accounting for 38 percent of the global gross investment in 2030. All this will change the landscape of the global economy, and GDH analyzes how.”
Projections for 2030 presented in the report indicate that the largest share of global aggregate investment activity will come from China, with 30 percent, followed by India and Brazil with a respective 7 percent and 3 percent. These shares from developing economies will be comparable to the United States, at 11 percent, and Japan at 5 percent. Meanwhile, the report indicates that developing Asia will hold capital stocks exceeding 55 percent of the entire developed world by 2030.
“GDH clearly highlights the increasing role developing countries will play in the global economy. This is undoubtedly a significant achievement. However, even if wealth will be more evenly distributed across countries, this does not mean that, within countries, everyone will equally benefit,” said Maurizio Bussolo, Lead Economist and lead author of the report.
The report also forecasts China and India to both surpass Japan and the United States as the world’s top two saving nations by 2030, with China saving $9 trillion (in 2010 dollars) and India saving $1.7 trillion.
“Despite strong saving levels to finance their massive investment needs in the future, developing countries will need to significantly improve their currently limited participation in international financial markets if they are to reap the benefits of the tectonic shifts taking place,” said Hans Timmer, Director of the Bank’s Development Prospects Group.