Near the Saudi border with Jordan lies the world's economic centre
Where is the economic centre of the world? In the middle of the trading floor at the New York Stock Exchange perhaps? Or perhaps somewhere amid the office blocks of London's Square Mile?
Danny Quah, a professor at the London School of Economics, says the reality is very different. The centre of global economic activity, he believes, sits in the Middle East, somewhere around the border of Jordan and Saudi Arabia.
It is not that this location is particularly a hub of activity itself. Instead, Mr Quah has calculated that this spot on the map is the mean position of all the economic activity going in the world, based upon measures taken at 700 points across the globe.
He has also produced a map showing where the world's economic centre of gravity (WECG) was in 1980, and how it has moved since, at three-year intervals, and the dots show an inexorable move east.
In 1980, the WECG was located in the Atlantic, about 1,600km west of Mauritania, but a few years later, thanks to the growth of economies in the East, it had reached West Africa. It then went on to travel almost due east across North Africa, before arriving at its current spot.
"Between 1980 and 2010 the world's centre shifted 5,000km east. That trajectory continues," Mr Quah said during a recent visit to Beijing.
What is doubly fascinating about the WECG is his prediction of how it is continuing to move and where it will end up. Estimates for the next four decades or so show a continuing, relatively fast, move east, until the speed at which the WECG is travelling east gradually slows. The dots, drawn at three-year intervals, move closer and closer together until the WECG seems to settle, in 2049, in south-west China.
It is likely to remain there or thereabouts for a while, given that its position can be thought of as being halfway between the centres of economic activity of the world's two most populous nations, China and India.
There could hardly be a more powerful illustration of the transfer of financial power east that has resulted in China becoming the world's second-largest economy.
Yet, of course, much of the trajectory remains nothing more than a prediction. If China's economic growth model falters, things could turn out very differently, and there are many who believe the country's export-driven, high-investment strategy is vulnerable.
In particular, some have questioned whether, if the West slips into recession again, China will be able to ride things out as well as it did after the slump that hit in late 2008. Mr Quah believes there are reasons why it can.
"Intra-Asian trade has become much more the engine of growth itself than we previously thought," he says.
Of course much of this, he notes, involves the Gulf region, with the UAE an important hub for trade with other parts of the region.
"How can the East continue to grow if it's export-oriented? Because it will export to other fast-growing economies in Asia, and to Brazil.
"Japan also has a huge role to play in the economic growth of East Asia. It's still a huge economy with lots of contributions of ideas. It won't show the same economic growth [as China] but … it's still a first-rate first-world economy with a hugely successful electronics industry."
The shift east also has implications for global economic governance, and Mr Quah believes this "rethink of … global policymaking" means economies in the East should have a greater say in major institutions.
This echoes many of the views from China in the run-up to the recent selection of a new IMF head.
China received the consolation prize of having Zhu Min, a former deputy governor of China's central bank, made a deputy managing director after France's Christine Lagarde was chosen to replace Dominique Strauss-Kahn, also from France, as the organisation's top official.
"As the world's centre of economic gravity shifts east, the question should not be what is good for the West, but what is good for the world," Mr Quah says.
Published: August 27, 2011 04:00 AM