China or NAFTA: the world's largest market in the 21st century?

The proliferation of internet access will open intriguing scenarios. On the one hand, windows of opportunity will be offered for developing markets (e.g., India and Brazil already have booming software-development industries). Also, ready access to the communication and information opportunities provided by the Internet may help stimulate education, improve health, and encourage entrepreneurs--thereby improving living standards and stimulating the economies. On the other hand, the dissemination of information, together with the ready access to free worldwide communication can abet terrorist groups such as has been seen with al Qaeda. Also, as widespread cyber attacks have showed, the Internet is open to abuse--from anywhere in the world.

CONCLUSION

The coming generation will be a period of great change--political as well as economic. The evolution toward multi-country economic integration will continue--especially in the Atlantic region. Today's economic powers will continue to dominate in the coming years. China may well become the world's largest individual economy. However, the United States, which is very likely to integrate with larger groups of countries into a massive free-trade area, will continue to be the dominant world economic force.

As China's wealth growth, it will become a more diverse economy. It will eventually become the massive consumer market of which western marketers have long dreamed. Its entry into the World Trade Organization and advancement up the economic-development scale will greatly increase its role in international trade and investment. As the development progresses, China will also become an important competitor in world markets to NAFTA, Europe, and Japan. Now China is more complementary to these markets than competitive. Its success is now primarily that of supplier. However, it is already learning rapidly and advancing technologically. More and more it is copying modern products and methods. In coming years, as Japan did so successfully before it, China will begin innovating. Then, our relationship will be competitive, rather than complementary.

China will evolve into an industrial power. Its economic strength will give it the potential for much greater political influence in the world. The extent to which these developments occur, however, will depend upon which of the four scenarios dominates in the coming years. In any event, China will continue to grow as an economic force. In coming years, it will likely develop very strong heavy industries and strong automotive and electronic industries. Given its size, its impact might be much greater than even was Japan's, even in its heyday. TABLE 1 The Largest Markets Of The World (1998; ppp--purchasing power parity *)

(1) (2) (3) (4) MARKETS POPULATION GNP GNP ANNUAL MARKET

IN MILLIONS MEASURED AT GROWTH RATE SHARE

(1998) PPP/COUNTRY (1990-98) (1998)

($ BILLIONS;

1998) NAFTA(USA, 397 $9,500 2.5% 26% Canada, Mexico) European Union ** 434 $8,000 1.6% 22% China 1,239 $4,000 11.1% 11% Japan 126 $2,900 1.3% 8% Rest of World 3,701 $12,100 3.3% 33% (187 countries) World 5,897 $36,500 2.4% 100% (210 countries) Source of generic data: Entering The 21st Century, World Development Report 1999/2000: Washington DC, 1999, p.230-23; 1997 World Development Indicators, Washington DC, The World Bank. * Purchasing-power parity (ppp): domestic purchasing power of all countries or groups expressed in the equivalent purchasing value in U.S. dollars ** including Poland, Hungary & the Czech Republic. Since these three countries appear to be near to membership in the EU, we are including theme here. TABLE 2 The World's Largest Market in 2010 (1998 US$; purchasing power parity)

(1) (2) (3)

POPULA- GNP GNP MARKETS TION MEASURED AT ANNUAL

(MILLIONS; PPP/COUN-TRY GROWTH

(2010) IN $ BILLIONS; (1998-2010; %)

(1998) VS.1990-1998) NAFTA 444 $9,000 3.0%

(2.5%) European 519 $8,000 2.5% Union (X) (1.6%) China 6.3% (Scenario A) 1,335 $4,000 (11.1%) Japan 1%

(1.1%) Rest of World 3.7% (187 countries) 4,265 $12,100 (3.3%) World 3.3% (210 countries) 6,688 $36,500 (2.4%)

(4) (5)

GNP MARKET MARKETS MEASURED AT SHARE

PPP/COUNTRY (2010; %)

IN $ BILLIONS (VS. 1998)

(2010) NAFTA $12,800 23%

(26%) European $10,700 19% Union (X) (22%) China $8,300 17% (Scenario A) (11%) Japan $3,300 6%

(8%) Rest of World $18,700 35% (187 countries) (33%) World $53,800 100% (210 countries) Source: columns 1, 2, 3 adapted from: Global Economic Prospects And The Developing Countries, Washington, DC: The World Bank, 1997, p.92., Entering The 21st Century, World Development Report 1999/2000, Washington, DC: The World Bank, 1999, p.250., other computations by the authors. In 1998 dollars. (X) The current fifteen EU member plus Poland, Hungary, and the Czech Republic. TABLE 3 The World's Largest Market in 2020 (purchasing power parity; 1998 U.S.$) MARKETS (1) (2) (3) (4) (5)

POPULA- GNP GNP GNP MARKET

TION IN MEASURED ANNUAL MEASURED SHARE

MILLIONS AT PPP/ GROWTH AT (2020

(2020) COUNTRY (2010-25) PPP/COUNT- VS.

IN $ RY ($ 2010)

BILLIONS BILLIONS;

(2010) (2020) FTAA 1,004 $16,500 4.0% $24,400 32%

--NAFTA $12,800 (23%)

--15 others $3,700 Europe 519 $11,300 2.0% $13,800 18%

--EU 18 $10,700 (19%)

--10 others $600 China 1,413 $8,300 3.5% $11,700 16% (Scenario A) (17%) Japan 124 $3,300 1.4% $3,800 5%

(6%) Rest of World 4,543 $14,300 3.9% $21,000 29% (162 countries) (35%) World 7,600 $53,800 3.3% $74,700 100% (210 countries) Sources: the population: The Wall Street Journal Almanac (1998, pp. 501-503). Column 2: Table 2. TABLE 4 The World Market After The Integration of The Western Economies--2020+ (1998 U.S.$)

(1) (2) (3) (4)

MARKET POPULATION GNP MEASURED MARKET GNP

MILLIONS AT PPP/ SHARE MEASURED AT

(2020) COUNTRY In % PPP/CAPITA

BILLIONS (2020+) (2020+)

(2020) FTAAT 1,523 $38,200 51% $25,000 (FTAA + Europe) China 1,413 $11,700 16% $8,200 Japan 124 $3,800 5% $30,600 Rest of World 4,543 $21,000 29% $4,600 Total 7,600 $74,700 100% $9,800 Source: The authors' calculations.

(1) Finance and Economics: China's Private Surprise," Economist, vol.351, no. 8124, June 1999, pp.69-70.

(2) Asian Development Outlook, 1996 and 1997, Asian Development Bank, Oxford University Press, 1997, p.242.

(3) World Bank op. cit., p.95

(4) World Bank, op. cit.

(5) (Henderson 1999).

REFERENCES

Asian Development Bank. (1997). Asian development outlook, 1996 and 199Z New York: Oxford University Press, 242.

Black, Conrad. (1999, Spring). Britain's Atlantic option. The National Interest, 15-24.

Bramall, Chris. (2000). Sources of Chinese economic growth, 1978-1996. New York: Oxford University Press.