The global economic landscape is experiencing a significant transformation, with trade flows, technological advancements, and consumer demand shifting from western nations to emerging economies in the east. This change is reshaping power relations and raising critical questions about cooperation, competition, and inclusion in a multipolar world. In his new book, West to East: A New Global Economy in the Making?, economist Arno van Niekerk explores these dynamics and their implications for Africa.
The shift in economic power became evident in 2018 when BRICS countries, primarily driven by China and India, surpassed the G7 nations in their contribution to global GDP. According to van Niekerk, the share of BRICS in global GDP rose from 32.33% in 2018 to 35.43% by 2024, while the G7’s share fell from 43.28% in 2000 to 29.64%.
Trade patterns are also shifting. The BRICS+ group, which includes eleven countries, captured 28% of world exports in 2024, approaching the G7’s 32%. This realignment of global trade dynamics indicates not only a rise in scale but also a deeper integration of these economies into global value chains, enhancing productivity and living standards.
Van Niekerk highlights that over two-thirds of global foreign exchange reserves are now held in Asia, particularly in China, Japan, India, and South Korea. China’s foreign direct investment in developing regions has also eclipsed that of Western nations, largely due to its Belt and Road Initiative, which spans over 150 countries.
In terms of consumer demographics, Asia is now home to more than half of the global middle class, driving demand growth. Predictions suggest that Asia will account for over 50% of global consumer spending, a dramatic increase from less than 20% in 1990. Furthermore, countries like China, India, South Korea, and Japan are emerging as leaders in technological advancement, particularly in fields like financial technology, artificial intelligence, and 5G adoption.
As this shift unfolds, the need for economic cooperation becomes increasingly urgent. Both eastern and western nations must make intentional efforts to address rising geoeconomic tensions and strive towards a sustainable economic future that benefits all countries.
Van Niekerk identifies five areas essential for fostering cooperative initiatives:
1. **Coordinated Policy Frameworks**: Establishing global minimum corporate taxes and harmonizing labor protections can ensure fair revenue for social investment. Aligning trade agreements with sustainable development goals is also crucial.
2. **Inclusive Trade and Investment**: Fair trade agreements should benefit small producers and marginalized communities. Developing regional value chains can help less developed nations move beyond raw material supply.
3. **Financial Cooperation**: Innovative financing mechanisms, such as green bonds and blended finance, should be accessible to low-income countries. This includes strategies for debt relief and public-private partnerships in social infrastructure.
4. **Knowledge and Capacity Building**: Joint research platforms can enhance collaboration on issues like climate adaptation and food security. Strengthening south-south cooperation will allow developing nations to share best practices.
5. **Governance and Multilateral Reform**: Reforming institutions like the World Bank and International Monetary Fund is essential to amplify the voices of developing economies on the global stage.
For African nations, the potential to shape future global economic dynamics is significant. The continent must prioritize building a digital infrastructure and enhancing technological capabilities to compete effectively in the global market. Initiatives could include developing a national broadband strategy and providing incentives for regional data centers, alongside fast-tracking education in technology and AI.
Moreover, African governments should focus on economic inclusion and sustainable development to ensure broad-based benefits from growth. Navigating geopolitical shifts and leveraging their strategic position in the competition between the US and China is vital. By fostering South-South cooperation and diversifying trade partnerships, African countries can secure investments and enhance their role in the global economy.
Van Niekerk emphasizes that addressing these challenges effectively will be crucial for Africa’s future. As the global economic landscape continues to evolve, the continent occupies a pivotal role in shaping the dynamics of international trade and cooperation.
