The Sun is Rising Again in the East

 | December 12, 2017 |

Since the 1950s, the relative power of the US is in a long-term decline as indicated by the following chart – displaying the last 2000 years of economic GDP history – while Asia has seen a significant population growth coupled with a massive re-emergence as a global super-power. Asia leads the share of world GDP at 18.3% as of 2017 with an ~87% growth rate for China since 2010. For Canada, this says we need to be thinking East, not West.

The author explains that for thousands of years, economic progress was largely linear and linked to population growth. Over the last century however, there has been an exponential rate of economic growth based on innovations in technology and energy resulting in a “hockey stick” effect to the World GDP per capita – see chart later in the article. Leading factors include the colossal impact of the Industrial Revolution on the West and the rise of the Technological Revolution we face today, both of which occurred in different regions at different times. As these massive forces continue to affect the other regions, in effect catching them up to the West on a per capita basis, the implications are vast for Canada and the US – our largest trading partner.

In order to better compete on the global scale and capture more share of global GDP, our point of view is that entrepreneurs and business owners in the West will find significant growth opportunities through international trade and exports. The key question will be, how is your market going to grow?  Will it be by catching up to the rest of the world in technology?  Through population growth? Or are you counting on continued innovation in that market to drive growth?

Felix M. Gelt is a Director in the Performance Improvement practice and leads our Expense Reduction Analysis offering at Farber. Felix can be reached at 647-796-6004 and