Growth in Emerging Economies: Implications for Resource-Rich Countries by 2030

Rapid growth in recent decades has significantly increased the global economic importance of some emerging economies. If this rapid growth continues and is concentrated in resourcepoor Asian economies, so too will the growth in demand for imports of primary products, to the on-going benefit of resource-rich countries. This paper explores how global trade patterns might change over the next two decades in the course of economic development and structural changes under various growth and trade reform scenarios. We employ the GTAP model and Version 8 of the GTAP database, along with supplementary data from a range of sources to support projections of the global economy to 2030. We first project a baseline from 2007 to 2030, assuming trade-related policies do not change in each region but that agricultural land, extractable mineral resources, population, skilled and unskilled labour, capital and real GDP grow at exogenously-estimated rates. Given the relatively long timeframe over which we are modelling, we modify the standard GTAP agricultural product income elasticities for rapidly growing developing countries, along with Armington elasticities, to more appropriately reflect their likely values over this time-frame. In the initial projection, the rate of total factor productivity growth is assumed to be the same in each of the non-primary sectors, and to be somewhat higher in the primary sectors. This core projection of the world economy is then compared with a number of alternative scenarios, including: slower productivity growth in primary sectors (so that real international prices for primary products rise well above 2007 levels by 2030, consistent with recent projections of international agencies such as the FAO, OECD, IFPRI and the IEA); faster grain productivity growth in China and India; and also liberalization of global trade barriers.