São Paulo – Developing countries should concentrate half the global stock of capital, equivalent to US$ 158 trillion, by 2030. Currently, these nations hold less than one third of the world’s wealth. In 17 years, the countries of East Asia and Latin America will have the lion’s share of these reserves, according to the Capital for the Future: Saving and Investment in an Interdependent World, disclosed on Thursday (16) by the World Bank.
The report forecasts that the share of global investment of developing nations should triple by 2030, climbing from one fifth in 2000 to three fifths in 17 years. “With world population set to rise from 7 billion in 2010 to 8.5 billion in 2030, and rapid aging in the advanced countries, demographic changes will profoundly influence these structural shifts,” says the document.
“We know from the experience of countries as diverse as South Korea, Indonesia, Brazil, Turkey and South Africa the pivotal role investment plays in driving long-term growth. In less than a generation, global investment will be dominated by the developing countries. And among the developing countries, China and India are expected to be the largest investors, with the two countries together accounting for 38% of the global gross investment in 2030,” said Kaushik Basu, senior vice president and chief economist, in a statement disclosed by the institution.
According to the report, the expansion of productivity, growing integration of global markets, solid macroeconomic fundaments and improvement in education and health are helping speed up growth and create massive investment opportunities which, in turn, are causing change in the global economic weight of developing nations.
The document shows that, different from what took place in the past, developing countries should have necessary funds to finance this massive future investment in infrastructure and services, including care with health and education. High rates of savings are expected in developing nations, reaching 34% of national income in 2014 and an average of 32% to 2030.
“Despite strong saving levels to finance their massive investment needs in the future, developing countries will need to significantly improve their currently limited participation in international financial markets if they are to reap the benefits of the tectonic shifts taking place,” said Hans Timmer, director of the bank’s Development Prospects Group, also in a statement.
The employment in the service sector in developing countries should answer to over 60% of total jobs by 2030 and to over 50% of world trade. This change should take place alongside demographic change to increase demand for infrastructure services. The report shows that the needs for infrastructure financing in developing countries should be US$ 14.6 trillion from now to 2030.
According to the World Bank, in absolute terms, the savings should continue dominated by Asia and the Middle East. In 2030, the institution forecasts, China should save more than any other developing nation (US$ 9 trillion), with India in the second place, with US$ 1.7 trillion, exceeding the levels to be saved by Japan and the United States in the decade of 2020.
As a result, points out the report, China should answer to 30% of global investment in 2030, with Brazil, India and Russia, together answering to 13%. In terms of volume, investment in the development should reach US$ 15 trillion, against US$ 10 trillion of the economies of developed nations.
*Translated by Mark Ament
