Part A – Rationale
The Organisation for Economic Co-operation and Development – OECD are indicating in a new report
(09/11/2012), that the balance of economic power is expected to shift dramatically over the next half
century, with fast-growing emerging-market economies accounting for an ever-increasing share of global
Divergent long-term growth patterns lead to radical shifts in the relative size of economies. The
United States is expected to cede its place as the world’s largest economy to China, as early as 2016.
India�s GDP is also expected to pass that of the United States over the long term. Combined, the two
Asian giants will soon surpass the collective economy of the G7 nations. Fast-ageing economic
heavyweights, such as Japan and the euro area, will gradually lose ground on the global GDP table to
countries with a younger population, like Indonesia and Brazil.
Looking to 2060: A Global Vision of Long-term Growth uses a new model for projecting growth in the 34
OECD members and 8 major non-OECD G20 economies over the next 50 years. The report forecasts global
economic growth of 3 percent annually, with sharp differences between the emerging-market economies,
which are expected to grow at a much faster pace, and the advanced countries, which will likely grow
at slower and often declining rates. Cross-country GDP per capita differences mainly reflect
differences in technology levels, capital intensity, human capital and skills.
"The economic crisis we have been living with for the past five years will eventually be
overcome, but the world our children and grandchildren inherit may be starkly different from
ours," said OECD Secretary-General Angel Gurr�a. "As the largest and fastest-growing
emerging countries fully assume a more prominent place in the global economy, we will face new
challenges to ensure a prosperous and sustainable world for all. Education and productivity will be
the main drivers of future growth, and should be policy priorities worldwide.�
The shifting balance of long-term global output will lead to corresponding improvements in living
standards, with income per capita expected to more than quadruple in the poorest countries by 2060.
The increase could even be seven-fold in China and India. With these gains, the gap that currently
exists in living standards between emerging-markets and advanced economies will have narrowed by 2060.
But large cross-country differences will persist. China will see more than a seven-fold increase in
per capita income over the coming half century, but living standards will still only be 60% of that in
the leading countries in 2060. India will experience similar growth, but its per capita income will
only be about 25% of that in advanced countries.
"None of these forecasts are set in stone," Mr. Gurr�a said. "We know that bold
structural reforms can boost long-term growth and living standards in advanced and emerging-market
OECD research shows that wide-ranging labour and product market reforms could raise long-term living
standards by an average of 16% over the next 50 years relative to the baseline scenario, which only
assumes moderate policy improvements.
Part A � Question (3,000 words)
In the above rationale, the OECD are predicting that there will be shifts in economic power,
development and growth from what they term the fast-ageing economic heavyweights, such as Japan and
the euro area�, plus the USA (the triad), towards the more �emerging-market economies� such as China,
India, Brazil and Indonesia (i.e. the BRIC nations).
If the OECD is correct with these assumptions, critically evaluate how these global dynamics could
affect MNEs setting their �Total Global Strategies� in the future?
Notes by me for the assignment Part A:
Part A (3000words):
– The case study is OECD.
– Please address the question when you answer.
– focus on the key words such as "Total Global Strategies", "Global dynamics",
"MNES". And give definitions for them.
– You must do PESTLE analysis for Part A, and put it in the Appendices
– Main body
– Appendices (don�t forget PESTLE analysis)
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