The world is shifting.
More than one-half of the world’s car sales, mobile phone subscriptions and oil, copper and steel purchases came from emerging markets during 2010. Here you can see the same story through these export and import, global GDP, and foreign investment charts. Or, you can look at this Forbes slide show to see that half of the world’s self-made female billionaires are Chinese.
How to remember the emerging economies? Just think BRICs, MIST, and CIVETS. For the developed world, this list includes countries ranging from Australia and Austria to Spain, Sweden, Switzerland and the United States.
Memorably, in his 20 minute TED talk about the developing world, Hans Rosling asks us to “Let my dataset change your mindset.”
The Economic Lesson
As emerging economies increase their participation in world trade, we can think of Adam Smith (1723-1790) and David Ricardo (1772-1823). In a factory, Adam Smith says specialize through division of labor. When each worker has a specific task, output multiplies. Increasing output requires bigger markets in order to sell what has been produced. As mass production enables us to move from local markets to regional specialization to free world trade, as David Ricardo explained, the entire world benefits from the efficiencies of comparative advantage.
An Economic Question: After looking at iPhone component facts here, explain how the global economy has shifted.