China, India to be largest investors among developing nations
Washington: India and China are expected to be the largest investors among developing countries by 2030, with the two Asian giants accounting for 38 percent of global gross investment, a World Bank report said on Friday.
"Among the developing countries, China and India are expected to be the largest investors, with the two countries together accounting for 38 per cent of the global gross investment in 2030. All this will change the landscape of the global economy, and GDH analyzes how," said Kaushik Basu, World Bank's Senior Vice President and Chief Economist.
According to the latest edition of the World Bank's Global Development Horizons (GDH) report, by 2030 half the global stock of capital, totaling USD 158 trillion, will reside in the developing world, compared to less than one-third today, with countries in East Asia and Latin America accounting for the largest shares of this stock.
Developing countries' share in global investment is projected to triple by 2030 to three-fifths, from one-fifth in 2000, says the report, titled 'Capital for the Future: Saving and Investment in an Interdependent World'.
With world population set to rise from 7 billion in 2010 to 8.5 billion 2030 and rapid aging in the advanced countries, demographic changes will profoundly influence these structural shifts, it said.
"GDH is one of the finest efforts at peering into the distant future. It does this by marshaling an amazing amount of statistical information," Basu said.
"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," he added.
According to the report, in absolute terms saving will continue to be dominated by Asia and the Middle East.
"In the gradual convergence scenario, in 2030, China will save far more than any other developing country - USD 9 trillion in 2010 dollars - with India a distant second with USD 1.7 trillion, surpassing the levels of Japan and the United States in the 2020s," it said.
As a result, under the gradual convergence scenario, China will account for 30 percent of global investment in 2030, with Brazil, India and Russia together accounting for another 13 percent.
In terms of volumes, investment in the developing world will reach USD 15 trillion, versus USD 10 trillion in high-income economies.
China and India will account for almost half of all global manufacturing investment.
The World Bank said South Asia will remain one of the highest saving and highest investing regions until 2030.
However, with the scope for rapid economic growth and financial development, results for saving, investment, and capital flows will vary significantly: in a scenario of more rapid economic growth and financial market development, high investment rates will be sustained while saving falls significantly, implying large current account deficits.
South Asia is a young region, and by about 2035 is likely to have the highest ratio of working- to non-working-age people of any region in the world.
The general shift in investment away from agriculture towards manufacturing and service sectors is likely to be especially pronounced in South Asia, with the region's share of total investment in manufacturing expected to nearly double, and investment in the service sector to increase by more than 8 percentage points, to over two-thirds of total investment, the report said.