Emerging economies are gaining weight in the global balance of power and replacing the United States as a leader. Earlier, US economic policy played a decisive role in the worldwide cycle and was the driving force, and now emerging economies play this role (Kemp, 2019). Until 2024, more than half of global growth will fall on China, India, Indonesia, Russia, and Brazil (Kemp, 2019). China and India also largely determine the oil consumption rate, influencing countries dependent on oil supplies (Kemp, 2019). By 2030, these countries will overtake the United States economy in size and become world leaders (Singh, 2019). The impact on the United States and the growing economies that the world should expect from India can be assessed by considering the effects of China’s economic growth. Although China’s influence is primarily stimulating, it can make countries dependent on their economic policies, and any crisis will slow the world economy.
China’s economic power makes it influential in the world, although the US still has more authority. China makes a lot of investments in developing countries, and mostly they perceive these actions positively but fear excessive influence on their economy (Silver et al., 2019). In addition to the investment, China is a significant export market for emerging economies (“How is China’s,” 2020). US-China relations are also beneficial to both sides, as they support many supply chains, the exchange of goods, and, accordingly, jobs. At the same time, there is the reverse – according to Atkinson (2020), China’s economic policy is characterized by currency manipulation and distortion of intellectual property rights, which negatively affect innovation. Thus, China’s influence, and India’s expected influence on the US and growing countries, may be contradictory.
Current problems demonstrate the dependence of the American economy on China. Sheng (2021) notes that due to the tension in relations, crucial supply chains have collapsed. For example, the lack of wood, semiconductors, and microchips does not allow building new houses and creating cars. As a result, investment in these areas decreased, and the economy slowed down. India’s increasing influence and role suppose another player on whom other countries will depend, and the consequences can already be observed.
The consequences of the pandemic for India are much more severe than for other countries, and considering the nation a powerful player, its crisis affects the whole world. In particular, the spread of the disease means the extension of international restrictions. More influential is that India’s pharmaceutical industry is third in the world. Besides other drugs, it produces about 70% of the vaccine, including one for low-income countries, and its export will be delayed (Kambhampati, 2021). Residents of India also represent a significant part of the back-office staff for American financial and pharmaceutical companies. The scale of the crisis in India significantly slows down the development of other economies.
Thus, China and India in a few decades will become the largest economies in the world, overtaking the early leader – the United States. Both these countries, although China is more influential, have already gained powerful positions. By examining the example of China and how a country uses its economic power, a rather contradictory impact on developed and developing countries can be expected from India. For example, China’s economic cooperation with the United States is beneficial for exchanging goods and creating jobs. Beijing also invests in emerging economies and stimulates their development. However, some of China’s manipulations have negative consequences, particularly for innovation for developed nations, and developing countries fear excessive influence on their economies.
References
Atkinson, R. D. (2020). Innovation drag: China’s economic impact on developed nations. Information Technology & Innovation Foundation. Web.
How is China’s slowing economy affecting emerging markets? (2020). Oxford Business Group. Web.
Kambhampati, U. S. (2021). India COVID crisis: Four reasons it will derail the world economy. The Conversation. Web.
Kemp, J. (2019). China has replaced U.S. as locomotive of global economy: Kemp. Reuters. Web.
Sheng, W. (2021). US economic growth decelerates, made worse by decoupling from China. Global Times. Web.
Silver, L., Devlin, K., & Huang, C. (2019). China’s economic growth mostly welcomed in emerging markets, but neighbors wary of its influence. Pew Research Center. Web.
Singh, K. (2019). India will overtake the US economy by 2030. World Economic Forum. Web.