Earth-shattering: proof that the world’s economic centre of gravity has moved decisively (back) eastwards
I attach an extraordinary graphic produced by McKinsey the global consultancy. I should preface my positive remarks about their exceptional strategic thinking by reminding us of their tenacious capacity as consultants to exploit client relationships. I was once told this joke by a BBC producer desperate for McKinsey to stop advising Aunty after years of limpet-like hanging on to very lucrative contract. ‘What is the difference’ he asked ‘between McKinsey and ET’ ? ‘At least the extra -terrestrial went home in the end’.
But just have a look at this. It embodies the best of the McKinsey tradition of encapsulating in powerful graphics the main points of their analyses. They call them ‘exhibits’. I used to try and emulate the approach when I worked for the Audit Commission in England and ran their publications business. My boss then was (now) Sir Howard Davies who had been a McKinsey alumnus before. Howard went on to be number 2 in the Bank of England, head of the Financial Services Authority and vice-chancellor of the LSE before taking a bullet over that university’s links with the Libyan regime. Before this episode in my view his only flaw was that he’d been a life-long Man City supporter. He certainly like all McKinseyites knew how to illustrate a point though I suspect he liked a laugh more than the average. He once came past my desk after the Danes had voted initially to reject the Maastricht Treaty singing ‘Wonderful, Wonderful Copenhagen’.
Anyway, the graphic tells us everything we need to know about how what Australians may be alone (ironically) in terming the ‘Global Financial Crisis’ turns out to be not that global. Or perhaps it just shows how the backdrop to the GFC is actually a long term shift back towards the economic primacy of the east for which process the GFC has acted as an accelerator.
Just look not just at how far back towards the east the Earth’s economic centre of gravity has gone. Look at the increasing pace of this process. It picked up pace before the GFC , with wealth shifting towards China even as casino capitalism in the West reached its zenith in 2007. Of course we now understand the massive extent to which the gamblers of the West – us- were being bankrolled by transfers of cash from China. Scarily for Europe and North America, the growth in Asian wealth and its journey to creating a significant middle class of its own, has really only just begun. I say ‘Asia’ because whilst we tend to fixate on China India and Indonesia are also well down the track to being Premiership status , economically speaking , indeed Champions League. In 20 years’ time the centre of world economic gravity will not be located on the above map.
Coming from Old South Wales I despair as the world’s economic centre moves further and further away from it. As an inhabitant of New South Wales it’s clear to me that Australia is getting ever closer to that centre. This will be the Asian century and Australia is well placed to take advantage of it.