An Overview of Global Development Horizons 2011 - Multipolarity: The New Global Economy

On Tuesday (i.e. 17.05.2011), World Bank has released a Report titled "Global Development Horizons 2011 - Multipolarity: The New Global Economy". The Report said that Six major emerging economies - Brazil, Russia, India, China, Indonesia and South Korea - will account for more than half the global growth by 2025. It further stated that  international monetary system will no longer be dominated by a single currency.

The Reports projected that these economies will grow on an average of 4.7 per cent annually,  while, the developed economies will grow at an average of 2.3 per cent annually (in the period of 2011-2025). In this report it is stated that, the Developing countries percentage share in the international trade flows has risen steadily, from 30 percent in 1995 to an estimated 45 percent in 2010.

The report also says that " ...... high-income countries are only gradually recovering from the financial crisis, most developing countries have swiftly returned to their fast pre-crisis growth trend." It further states that China was one of the first economies to emerge from the crisis and returned quickly to around 10 percent growth rate. While, India had experienced a stronger contraction, still attained more than 10 percent growth in 2010 and the government is putting in place an ambitious new Five Year Plan (with improved policies and necessary investment programs) to keep growth at that level.

It also expressed that "Even in the absence of such exceptionally high growth rates in the developing world, the balance of global growth is expected to shift dramatically." In the report, the world bank further stated that "The changing role of developing countries will come with major transformations to their economies,corporate sectors, and financial systems" 

Mansoor Dailami, lead author of the report and manager of emerging trends at the World Bank, in a press release said that "The projected changes in the global economy are fundamental. Overall, these shifts will likely be positive for developing countries. However, a key question is whether existing multilateral norms and institutions are sufficiently strong to accommodate the passage toward multipolarity. The challenges of managing global integration among power centers makes strengthening policy coordination across economies critical to reducing the risks of economic instability"

World bank report forecasts that there are 3 possibilities of changes in international currency scenarios during 2011-2025. They are

1. U.S dollar's may remains dominance without any Challenger.

2. Multipolar international monetary system might emerge most likely with the Dollar, Euro and Renminbi at the centre of the system.

3. Dissatisfaction with an international currency system based on national currencies leads to reforms that make supply of world's currency the result of  multilateral decisions. It is a role intended for the SDR when it was introduced.

The report provides us a clear view on the transformational changes happening in the developing countries and how the emerging economies are going to take the lead of global economy in near future.