The Rising Influence of Rising Affluence - India

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56.8. EARNING MORE. Change in the portion of people with annual disposable income above. $10,000; in pct. points. Guangz
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12/21/2009 EE,MW,NY,SW,WE

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Monday, December 21, 2009

THE WALL STREET JOURNAL.

WORLD A decade marked by terrorism, financial crisis—and turbocharged middle-class growth 2000 U.S.S. Cole, Yemen

2001 9/11

2002 Bali, Indonesia

2004 Madrid, Spain

2005 London

2008 Mumbai, India

MAJOR ATTACKS

QUIET REVOLUTION The map below shows how the number of people with access to the Internet has grown in the last decade EARNING MORE

FASTEST-GROWING CITIES

Change in the portion of people with annual disposable income above $10,000; in pct. points

Germany

Canada U.K.

Slovakia 84.2 ●

U.S: 227 million in 2009

China: 375 million in 2009

Poland

France

Lithuania 78.4

Guangzhou, China 104.0%

Turkey

Spain

U.S.

Largest change in population, 1999-2009, among cities with at least 1 million inhabitants



Japan

Iran

Chongqing, China 90.5

Italy



Romania 76.7

China

Pakistan

Mexico



S. Korea

Nanjing, China 68.6





INTERNET PENETRATION

Czech Republic 75.0 Estonia 73.6

India

Colombia

Number of people with access to the Internet, in millions







Indonesia

2009 1999



Hungary 70.9

Dubai, U.A.E. 66.0

Vietnam

Ibadan, Nigeria 56.4 ●

Santa Cruz, Bolivia 50.6

Brazil



200 100 50 10

Latvia 70.7 ●

Croatia 68.0

Maiduguri, Nigeria 50.0 ●

Nairobi, Kenya 48.9





Russia 64.3

Gaziantep, Turkey 47.8





Poland 56.8

Wuhan, China 47.0

MOBILE-PHONE USAGE Countries with the biggest change this decade in the number of households with mobile phones

1999 Russia Tumultuous politics, unrest in the Caucasus, loose nuclear weapons

1999 3%

2009 92%

ARGENTINA

11%

99%

0.1%

CZECH REPUBLIC

88%

2%

AZERBAIJAN

90%

10%

ROMANIA

94%

4%

JORDAN

90%

3%

BULGARIA

86%

BIGGEST WORRIES In 1999, investors' list of global worries was topped by post-Cold War aftershocks. During the decade, terrorism and war loomed large. By the end of the decade, the role of politics in economic policy dominated concerns. Political-risk consultancy Eurasia Group rates the places seen as the greatest risks, then and now, of developments that could hit markets globally.

India and Pakistan

The Balkans

East Asia

Argentina

Armed conflict

Financial crisis ebbs but bad debt remains a burden

Growing economic crisis

Conflict over Kashmir between two nuclear powers

MAJOR U.S. TROOP DEPLOYMENTS

= 5,000 troops

1999 Balkans

l

2009 Afghanistan

E.U. Fiscal policy

U.S. Financial crisis may inject politics into push for new regulation

divergence generates sovereign-debtmarket volatility and increased default risk

l

Japan Fiscal constraints and policy making by party new to power drag on global growth

5%

88%

COLOMBIA

Afghanistan and Pakistan U.S. battles militants across a porous border from a politically fragile nuclear power

CHINA

2009 Iran Sanctions over nuclear program provoke defiance

Iraq

Sources: Euromonitor International; Eurasia Group; photos by U.S. Navy (Cole), Getty Images (9/11), Agence France-Présse/Getty Images

Brett Taylor and Niraj Sheth/The Wall Street Journal

The Rising Influence of Rising Affluence

A man examines a Hummer at an exhibition of parts for modifying luxury vehicles in Shanghai in October. be part of what it terms the global middle class. That’s three times the number today. What’s the bigger upside of all this economic enfranchisement? “At some point, when you have a sufficiently large middle class—that’s the key to sustained good government,” says Nancy Birdsall, president of the Center for Global Development, a research organization in Washington. “It’s the middle class

Composite CYAN BLACK YELLOW MAGENTA

asks the question at Dow gatherings in China and India, a forest of arms wave in the air. There are other points of angst along the road to economic integration. Robust expansion can be followed by great dysfunction, as the past two years of financial crisis have shown. Environmental damage and income inequality are ever-present threats to stability. And protectionism is straining at the leash in Congress and parliaments across the globe. Another spike in unemployment could well set it loose. Still, expect the momentum that has built over the past 10 years to speed straight into the next decade. Aspiration begat Hummer Man, and by the end of the decade it had consumed the brand as well: A Chinese company bought the vehicle from General Motors Co. It also propelled men like Zhang Jingyi into this new world— the fuel for future global growth. It was the latter part of the decade, and Mr. Zhang was sitting outside the Beijing Railway Station, his possessions in a single canvas bag. His was a typical story of the times. Like migrants in Latin America, Africa and Central Europe, Mr. Zhang had come to the city to find a better life. “I need to earn more money to pay for my son’s education,” he said. And behind him, waiting for their chance to plug into the grid: roughly 700,000 Chinese, still on the farm, with growing aspirations of their own.

John Bolton, U.S. diplomat

Sept. 11th and the Iraqi war changedtheworldstartingfromthe idea that came after the fall of the Soviet Union of having an American century. The United States remains the most powerful country. But theycannotanymore runthe world. Thesecondbigmomentisthefinancial crisis. Europe and the U.S. will relatively lose vis a vis China, India, Russia, Brazil and other emerging powers. I call Europe the unfulfilled wish of the decade. We did things that never happened in history. We have a common currency that has changed the natureofthemodernstate.AndthenEuropestoppeditwithafearofimmigration, fear of what could happen in the future. In past crises, we got out with very radical innovations. If we want to comeout of this crisis, we need to build new consumersin theglobal market and together tackle global problems. —Mr. Prodi headed the European Commission from 1999 to 2004.

Getty Images

Getty Images

Bloomberg News

litical influence. And they will grab a fatter slice of high-end innovation—the lucrative part of the global market that the U.S. and the developed world have considered their own. Andrew Liveris, chief executive of Dow Chemical Co., sounds the warning a different way. At employee gatherings in the U.S., he asks who has children studying to become engineers. A few hands go up, he says. When he

Romano Prodi, ex-EC president

Pervez Musharraf, Pakistan leader The defining element of the past decade has been the shift of worldstrategicfocusfromEurocentrism toward South and West Asia. After 9/11, the offensive in AfghanistanandPakistan'sjoiningoftheantiterrorcoalitionhaveinitiatedaconflict whose culmination is not within sight. The Taliban and Al Qaeda have unleashed a most vicious form of terrorism, combining thedevastatinglylethalpowerofexplosiveswith suicidebombing.This threatensthewholeworld.The world is nowadditionallybutfalselyconcernedaboutPakistan’s nucleararsenalfalling into terrorist hands. All this upheaval in South Asia, when seen within the context of the unresolved Palestine and Kashmir disputes, the war in Iraq and the tension with Iran, raises the specter for some of a conflict between the West and Islam. Have we blundered into a Third World War in a nontraditional form? —Gen. Musharraf was president of Pakistan from 2001 to 2008.

that demands a competitive system, property rights, the rule of law, an economic setting where they can compete, where they aren’t fighting the insider privileges that are associated with developing economies.” But upside is in the eye of the beholder. New economic powers are rising abroad. They will continue to take jobs away from higher-cost developed countries. They will demand more po-

The proliferation of weapons of mass destruction will remain the greatest physical threat to America’s security. The greatest political threat is to representative governments like ours, and whether they willprevailindefendingindividualliberty and their own national security, orwhethertheywillsinkintothemiasmaof“globalgovernance”andbureaucratic control. These issues converge when deciding how to prevent proliferation, whether by states or terrorists. Shall we engage in endless negotiations in international fora, and trust to pieces of paper to protect us, or shall we unapologetically pursue safety for America and its allies through all means necessary, including pre-emptive force and regime change where appropriate? We wasted much of this decade pursuing the globalist route, so unfortunately time is now very short to determine whether a resurgent United States can yet save the day. —Mr. Bolton was U.S. ambassador to the U.N. in 2005-2006.

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Call him Hummer Man—our man of the decade. It was 2005, and the young Chinese man had parked his beast of a vehicle, a cherry-red Hummer with big fog lamps and tires the size of Nebraska, at a busy intersection in downtown Shanghai. As he sat in the driver’s seat, his fellow Chinese passed and marveled. “What a beautiful machine,” a reporter yelled up to the driver. The man looked down, pointed to the hood and responded simply: “Turbocharged.” There were many events that grabbed world headlines in this first decade of the 21st century: the Sept. 11, 2001, terrorist attack on the U.S.; the wars in Afghanistan and Iraq that followed; natural disaster in Asia; financial intoxication, and the subsequent global purge and crash. But a good argument can be made that Hummer Man, poster child for new affluence, embodies the more fundamental story of our times—and the far more dominant and lasting force affecting world affairs. Across the globe, economic and political liberalization reached critical mass in recent years, propelling hundreds of millions of people up the income curve, and unleashing a flood of ambition and aspiration. A force that started to build in 1978 in China, 1991 in India, and more recently in many other developing

economies, is now indeed turbocharged. Over the past decade, the number of households with annual disposable income of more than $10,000 rocketed in countries as diverse as Algeria, Brazil, Kazakhstan and Poland. China zoomed past Japan and the U.S. to become the largest market for auto sales. Cellphone subscriptions in India rose 240-fold, a rate outpaced by Syria, Vietnam, Kenya and a number of other nations, says Euromonitor International, a research firm. In fact, technology played a special role firing growth through the decade. New freetrade agreements helped many poor nations expand. So did better economic management and liberalized rules for business. But it is technology that has been a great equalizer. “Technological breakthroughs such as the Internet and cellphones have helped regions like Africa become connected,” says William Easterly, an economist at New York University. “Kenya suddenly figured out it could capture the European market for cut flowers by using the Internet” to buy and sell, he says. “It’s just dynamic Kenyan entrepreneurship.” The World Bank suggests that the global economy could expand in size to $72 trillion by 2030 from $35 trillion in 2005, spurred by developing countries. Under that scenario, the Bank estimates that by 2030, 1.2 billion people in developing nations will

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By John Bussey

Associated Press

As Terrorism and War Shook the World, Sweeping Change Came From the Spread of Economic Liberalization