McKinsey’s Economic Centre of Gravity – Round Trip

You may remember the post I did on the economic centre of gravity (ECG) by LSE’s Danny Quah. By economic centre of gravity he refers to the average location of the planet’s economic activity measured by GDP generated across nearly 700 identifiable locations on the Earth’s surface. Recently the McKinsey Global Institute showed how the economic centre of gravity – the geographic center of the world’s annual economic growth – has moved since AD 1 to a forecast year of 2025 – at a speed of 140kms per year.

Timeline:

1. Until 1700 China and India were about 60% of world GDP
2. British and American Revolutions which led to mass urbanisation and productivity gains ECG moved West
3. 1980’s-90’s it gravitates back to the East with the expansion of Japan and other asian economies. This is even with the Asian Crisis in 2000.
4. 2000 – 2010 sees a massive shift to the east with the impact of the Financial Crisis plus the continued growth of developing nations in the east.

McKinsey put the growth down the speed at which cities are growing especially in India and China. This has ultimately given rise to productivity and a growing consumer class. Much of this future growth (approximately 47%) will be driven by 440 developing world cities.

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