© Gurumurthy Kalyanaram (2007)
Gurumurthy Kalyanaram is a management consultant and a professor. He can be reached at gurumurthy.kalyanaram@gmail.com.
The size of the Unites States economy is about $13 billion. Assuming the average annual growth of 2.5 percent (this has been the average since World War II), the U.S. puts. out about $320 billion annually. On the other hand, the sizes of the economies of China and India are estimated t o be about $2.5 trillion and $1 trillion respectively. Assuming a monumental and unsustainable 10 percent average annual growth, China puts out about $250 billion annually and India puts out about $100 billion annually. So every year, the U.S. still adds more to its economy more than China or India does.
In this face of these empirics, it is impossible to argue that either China or India is going to overtake the U.S. in economic superiority.
However, what might change the equation is one of two very discrete and dramatic events. First possibility is a collapse of the U.S. economy triggered by some event or a set of events. But that's unlikely. Even the current oil price increase from about $20 per barrel to about $130 per barrel has had only marginal impact on the larger economy. The U.S. economy has shown remarkable resilience -- the Savings and Loans Industry crisis in 1980s, the dot com bust in the early 2000s, and the housing crisis in the last year or so are troublesome but they have not and cannot break the U.S. economy.
The second possibility is a new innovation or a set of innovations that dramatically alters the way of life. Think of steam engine, or Bessemer process for mass production of steel, or world wide web (WWW) technology. But, here, too the U.S. appears to be, if any thing, poised ahead of other societies -- think of genetics and genome therapy, or genetically modified food, or clean technologies, or nano-technology, and more.
The general argument that the U.S. has borrowed so much from other societies that it has now become a servant of these societies is not compelling – simply put, where are these societies, individuals and organizations going to put their monies? If not the U.S., where else? Of course, there will be some nominal and periodic variations and ups and downs but it is unlikely that there can ever be a run on the U.S. economy because there is no there large-scale alternative.
May be I am missing a new breakthrough -- a new steam engine -- but short of that the U.S. is likely to dominate the world of economy, commerce, and innovations for the next 50 years.
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