Clearing the harbor of the collapsed bridge and debris requires the removal of containers from the Dali so that it can be towed away, as well as the removal of wreckage, section by section. Meanwhile there are 11 large ships stuck in the port until the main channel opens. With the primary channel only 50 feet deep, the wreckage blocks all large vessels from entering the Port of Baltimore. On April 28 the first container ship since the wreck passed through a temporary channel.

A deeper channel was opened May 10, and the permanent channel is expected to reopen by June. The Navy is relying on contractors to bring cranes in to remove the salvage.

Since the incident, many naval and shipping experts have chimed in on social media about the state of our Navy and Army Corps of Engineers. There is a concern about the military’s lack of capacity to conduct salvage operations without contractors.

As good ports are determined by geography, there are only so many options for the US Navy. Naval bases are in enclosed bays, such as Puget Sound, San Diego, and San Francisco. Nearly all of them are located behind a bridge that crosses the mouth of their respective bays.

There are five major naval bases behind narrow passageways, and three that are easily obstructed by an unassuming containership. One can find all of these using google maps in minutes. It does not take long to find where the home ports are for American warships or what their deployment cycles look like. The US even has fleet trackers that are posted on social media. Using this information alone, one can estimate how many ships are in port at any given time, and their state of readiness. There is no need for satellite surveillance.

According to the International Chamber of Shipping, there are 1.8 million seafarers worldwide. Most come from China, India, Indonesia, the Philippines, and Russia. Two of those nations are adversaries. The largest ocean carrier, Mediterranean Shipping Company, has more than 700 ships and a long history with Balkan drug cartels. The largest cocaine seizure in US history took place on one of their vessels, as did many other massive drug busts.

This begs the question: is it really impossible for a small number of Chinese-flagged container ships to obstruct the entrance to critical ports, trapping most of the US Navy in port and isolating approximately one-fourth of the Navy from reinforcement and resupply? Such an event would be the modern analogy to the Battle of Gravelines or Red Cliffs, with the Pacific becoming a vacuum for an up-and-coming naval power—China.

America’s allies throughout the Pacific would suffer. It is impossible to maintain logistical supply lines in the Pacific without the Navy. A modern container ship can carry up to 400,000 tons of cargo. The Air Force’s 52 C5 Galaxy cargo aircraft and 275 C17s carry a combined cargo of 25,975 tons. It is far more efficient and practical to resupply by sea.

The US Navy may have the best radar, the best anti-ship missiles, and the best crews, but the fleet only has so much food, fuel, and firepower. Unfortunately, US Navy logistics capabilities were completely gutted, including prepositioned stocks. On top of that, as seen with the USS Boxer’s recent breakdown, the Navy has limited dry-dock capabilities for repairs.

In light of the Dali disaster and the US Navy’s present capabilities, it is time to reassess the security of American ports from asymmetric or even conventional attack. They are simply more susceptible to attack than at any time.

After the War of 1812, the Fortification Board was created to plan for coastal defenses. From then until World War II the Army Corps of Engineers occupied their time with coastal defense. This is no longer their focus—or any other federal agency’s focus. This leaves the nation vulnerable to an unexpected attack.

The United States’ position in the world is a result of American economic strength, a strong military, and a commitment to the freedom of navigation. Adversaries do not share these values and seek to change the status quo. Times have changed, and so have the means and methods of adversaries to harm the United States.

First, it was foreign port security after the USS Cole bombing. Then it was airline security after the attacks of September 11, 2001. Now, the nation must adapt its capabilities and defenses to secure ports and entryways—before an attack has a catastrophic effect. This will require investment in time and treasure, as well as a shift in strategic thinking. The payoff is preventing a larger Pearl Harbor. The time to act is now when costs are at their lowest.

Michael Fincher is a Fellow at the National Institute for Deterrence Studies. The views expressed in this article are the author’s own.

Fixing the Nation’s Harbor Security was originally published on Global Security Review.

Despite pressure from the Biden administration, the Indian government stuck to its position and, instead, bought Russian oil at discount prices only to refine it and sell it to Europe. The Indians also continued to buy arms from Russia and have sought to rebuild the defense arsenal and civilian scientific sector with Russian technology. Why have the Indians stuck to the Russians despite a warming relationship with the United States? What are the implications of India’s continued relationship with Russia?

The Military Linkage

First and foremost, India sees Russia as the source of weaponry, military technology, and the provider of systems that the West is unwilling to sell. Thus, the Indians leased nuclear submarines from the Russians which proved invaluable in training personnel for India’s own domestically manufactured nuclear boats. Negotiations continue for the lease of another Akula/Nerpa nuclear submarine from Russia although the international sanctions imposed on Moscow following the invasion of Ukraine have made payments difficult.

Similarly, the Su-30 MKI now forms the backbone of the Indian Air Force (IAF) fleet (with over 270 aircraft). The Indian government has proposed the purchase of 12 more Sukhois to help replenish India’s declining strength in air combat squadrons. The government officially authorizes 42 squadrons, but the IAF is down to roughly 31 squadrons against a continued two-front threat from Pakistan and China.

Even at the most basic level, after years of trying to indigenize the development and production of an assault rifle, the Indians set up a factory to build the Kalashnikov variant, the AK-203. For a country that has both internal and external security concerns, having a capable assault rifle for both its military and security forces remains a priority.

The more important factor is not just the ability to replenish the military supplies of the country but rather the fact that the Russians are providing the technologies India seeks to become a technologically advanced nation in the production of weaponry.

The India-Russia collaboration has led the country to jointly develop the Brahmos supersonic missile. The next generation of the weapon is supposed to have a hypersonic capability. That would put India in the same league as the United States, Russia, and China in terms of its missile capabilities.

Equally important is the fact that the Indians secured an export order from the Philippines for the Brahmos. Discussions are ongoing to sell the missile to Indonesia. This fulfills a long-term Indian ambition to become an arms exporting nation. While India seeks to sell its indigenously developed Tejas fighter to countries as varied as Argentina, Egypt, Nigeria, and the Philippines, it has not met with success. It will also be interesting to see if the United States permits a plane with an American engine to be sold to countries that are potential customers for American aircraft.

Similarly, India’s space program, which has impressive accomplishments like missions to Mars and the Moon, was built on Russian heavy launch engines. Now, the Indians are negotiating for the next generation of cryo-engine from Russia to further their ambitions in space.

On the other hand, there are problems in the mechanics of the relationship that lead, on the Indian side, to a degree of frustration. Spare parts remain a problem, although India has started to use its domestic industry to reverse engineer Russian systems. There are also delays in getting completed systems from the Russians as witnessed by the lengthy delays in acquiring the Gorshkov aircraft carrier because the shipyard could not carry out the retrofit in a timely manner.

The other problem is that post-Ukraine sanctions make it difficult to purchase weaponry from Russia. This is not a problem for heavily sanctioned countries like North Korea and Iran, but India sees itself as a part of the international community and a supporter of a rules-based international order. Consequently, New Delhi walks a fine line between purchasing weapons systems while not disregarding international concerns. This complicates the purchase of the S-400 anti-missile system from Moscow as India has troubles working out how to make the payment through internationally acceptable rules.

Although the Russians are careful about how India uses the nuclear technology it provides (asking for full-scope safeguards), it does not sanction the Indian use of Russian conventional systems and allows New Delhi to use Russian systems to carry strategic weaponry. Thus, the Su-30 can be used to carry nuclear weapons.

In contrast, all weapon sales from the United States lack guarantees that, in the event of a conflict Washington opposes, weapons are sanction- and embargo-free. This is one of the reasons India preferred the Rafale over the F-16—since the former could be used as a nuclear delivery system. For a country that is far from self-sufficient in weapons production, this is a major factor in deciding arms purchases.

Diplomatically, the Indians are getting closer to the United States. However, New Delhi does not want to antagonize Russia or China, especially because the American relationship, as discussed, comes with its own set of constraints and limitations. Thus, while the Indians see China as an existential threat, they are careful not to cross the point of no return with Beijing by pressing for a full-blown conflict. Similarly, when it comes to the supply of raw materials, Russia remains an important partner.

Even though India’s largest trading partners are China and the United States, the economic link with Russia remains vital to Indian developmental interests. American sanctions on Tehran forced India to wean itself off Iranian oil. The Russian supply of oil has been beneficial to India. Not only did it reduce import costs, but it allowed India to refine the crude and sell it on the international market—particularly to Europe.

In the short to medium term, the oil supply chain from Russia cannot be disrupted since India has few alternatives. This is of importance because Middle East oil becoming more expensive due to production cutbacks.

Lastly, a negative factor shapes the desire to keep open ties with Russia. New Delhi worries that if Moscow and Beijing get too close, it narrows India’s maneuvering space in the international system.

In a post-Ukraine war world, Moscow will likely give up its aspiration of being considered a western power and, instead, is highlighting its identity as a Eurasian nation with close ties to China. A Russia that sides with China against India would be New Delhi’s worst nightmare. This problem is compounded if Washington takes an even-handed approach to an India-China confrontation as Trump did, when, in 2020, he offered to mediate after Indian and Chinese forces engaged in fisticuffs along the border. Thus, India will continue the relationship with Russia until guaranteed military and economic alternatives are provided to India by the West.

Amit Gupta is a Senior Advisor on Peace and Conflict Resolution to the Forum of Federations, Ottawa. The views in this article are his own. He can be reached at agupta1856@gmail.com.

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It Is Difficult to Break the Russia-India Link was originally published on Global Security Review.

As the region’s economic and security landscape continues to evolve, and as Chinese interests in the region grow, the United States government must increase its engagement with the Association of Southeast Asian Nations (ASEAN) through two avenues: first, by confirming an ambassador to ASEAN, and second, by sending President Trump as the head of the U.S. delegation to the 2019 East Asia Summit (EAS). These two actions would send a powerful message about American interest in promoting economic partnership, balancing against Chinese influence, and promoting a rules-based order in Southeast Asia.

The East Asia Summit represents one of the most important diplomatic events in the region. Featuring heads of state and government from ASEAN members and invited guests, the EAS provides a forum for high-level engagement in a key strategic part of the world for American security and trade interests. In recognition of this reality, President Obama attended the event on five separate occasions after the United States first received an invitation to the summit in 2011. In the past two years, however, former Secretary of State Rex Tillerson and Vice President Mike Pence have attended the summit instead of the president. Leading the American delegation to this year’s EAS would allow President Trump to show partners in ASEAN that America remains committed to dialogue and collaboration in the region, even as China increasingly asserts its own interests there.

The president’s attendance at the East Asian Summit would provide the United States with a high-profile opportunity to demonstrate resolve in Southeast Asia. Additionally, filling the vacant position of U.S. Ambassador to ASEAN would expand the number of channels for more sustained engagement. At this pivotal point for the region, the U.S. government must deepen its dialogue with regional partners even as the president attends this year’s summit to convey America’s high-level interest in Southeast Asia. China has recognized the importance of sending an ambassador to ASEAN, maintaining this representation without interruption since 2008. Given last year’s adoption of the ASEAN-China Strategic Partnership Vision 2030, this role will only grow in importance.

These steps forward in American engagement with ASEAN member states are increasingly necessary.

According to the China Global Investment Tracker, a collaboration between the American Enterprise Institute (AEI) and the Heritage Foundation, Chinese overseas investment in ASEAN member states has exceeded $55 billion since 2017. In Vietnam, for example, Chinese foreign investment has totaled almost $4 billion since the beginning of 2017. Meanwhile, in Indonesia, the host country of the U.S. Mission to ASEAN, Chinese investment reached nearly $9 billion in the same time period.

As February’s controversy surrounding the role of Chinese firm Huawei Technologies in the Thai government’s 5G infrastructure initiative demonstrates, however, increased economic integration between China and ASEAN member states can come at a significant cost. In this environment, the United States must utilize diplomatic means to underscore continued economic engagement in Southeast Asia.

Furthermore, these actions would send a message to the region: the United States seeks deeper diplomatic, economic, and strategic engagement with the nations of Southeast Asia, both on a more consistent basis and at the highest possible levels. Following last year’s passage of the Asia Reassurance Initiative Act (ARIA), confirming a nominee for the position of U.S. Ambassador to ASEAN would also signal continued support for heightened American involvement in the region by both the U.S. Congress and the executive branch. As China seeks to extend its influence among ASEAN member states through the simultaneous uses of inducement and intimidation, protecting U.S. interests in the region needs a whole-of-government response.

ASEAN presents the United States with more opportunities than challenges.

China has recognized the strategic importance of the region and taken action to engage economically and diplomatically. The combined gross domestic product of ASEAN member states exceeds $2.5 trillion. Defense spending among littoral states surrounding the South China Sea will likely reach $250 billion annually by 2020. The president should travel to the East Asia Summit this year in pursuit of those opportunities for partnership, and he should nominate someone to serve as U.S. Ambassador to ASEAN to do the same.

In the past, the United States led the way in engaging with ASEAN. The government sent an ambassador to the organization’s headquarters and established a diplomatic mission there before any other non-member state. President Obama represented the United States at the East Asia Summit five times in six years; President Xi Jinping has yet to attend the gathering, and President Vladimir Putin attended for the first time last year. Confirming a qualified individual for the vacant ambassadorship and sending the president to this year’s summit would signify American leadership in engaging with ASEAN once again.

Two Ways for the United States to Deepen Diplomatic Engagement with ASEAN was originally published on Global Security Review.

In reference to China’s foreign policy strategy, Deng Xiaoping once said: “hide your strength, bide your time.” For three decades, Chinese foreign policy was implemented accordingly. As China realigned itself as a market economy, it seemed content in its role as the  “world’s factory;” at the same time, the rest of the world was content with cheap consumer goods that were produced in China.

In recent years, however, Xi Jinping has overseen a significant shift in China’s foreign policy. China has become increasingly assertive in pursuit of its national security, foreign policy, and economic interests both in the Indo-Pacific region and throughout the world, from Asia to Latin America. China’s policies and behaviors, from the massive Belt and Road Initiative (BRI) to the creation of artificial islands in the South China Sea, are clear indicators that Beijing is done hiding and biding.

Significant amounts of natural resources and secure trade routes for exports are essential to ensure China’s continued economic growth. As the land components of the BRI expand across Central and Southeast Asia, the South China Sea remains a point of geopolitical volatility. The South China Sea is host to some of the world’s most critical shipping lanes. Eighty percent of China’s energy imports pass through the Strait of Malacca, strategically positioned between the countries of Malaysia, Singapore, and Indonesia—all of which are American allies.

China seeks to place the South China Sea firmly within its sphere of influence. Doing so would see China move from a position of geopolitical vulnerability to one of strength, effectively maintaining a “Great Maritime Wall” that would ensure China’s unfettered access to both the Indian and Pacific Oceans. Consolidating and solidifying its sphere of influence will be the most significant Chinese foreign policy challenge of the twenty-first century while maintaining the status quo and retaining its strategic advantage will be that of the United States.

Estimates currently project that China will be operating a fully-fledged blue-water navy by 2030. It is likely that, around this time, China will be pushing to break through the First Island Chain in the East and South China Seas that are currently controlled by U.S. allies. Until China’s hard power capabilities are fully matured, China will continue to vie for influence using diplomacy and other soft power vehicles.

China’s Soft Power Capabilities

The canonical conception of soft power is centered mainly around ideas like constitutionalism, liberal democracy, and human rights, none of which are on offer from an unapologetically authoritarian China.  While Chinese universities are drawing growing levels of international students, the fact remains that, on the whole, China’s cultural pull is meager. Its most famous artist lives in exile, state media outlet Xinhua gets little traction outside of China, and while K-pop and J-pop are widely played outside of Korea and Japan respectively, Chinese popular music has failed to capture international attention.

China may not have much to offer as an alternative to the American Dream for populations around the world, but for the leaders and governments of developing states, China presents an attractive partner. Rather than seeking investment and financial support from the Bretton Woods institutions, which require governance and human rights reforms, many governments are turning to Beijing, which attaches far fewer strings.

While China’s lack of democratization does damage its international reputation, that damage must be viewed in the context of the relative decline of American soft power. The post-9/11 wars in Afghanistan and Iraq have harmed the global impression of the United States as a “bringer of democracy,” to the extent that such a phrase are now mostly invoked in irony.

In Latin America, the United States’ historical sphere of influence, many states are signing bilateral agreements with China on everything from hydropower projects to the development of telecommunication networks. China’s engagement in Central and South America has resulted in it becoming the region’s largest creditor. Furthermore, as U.S. levels of domestic shale production increase, there will be less U.S. demand for foreign energy. China’s thirst for oil, on the other hand, will continue unabated. For many Latin American nations, the choice of China as an economic partner has been a straightforward one.

The appeal of China as an alternative isn’t due to Beijing’s alignment with specific ideological criteria. Instead, China is appealing because it is an alternative. China profits from the extent to which the U.S. influence declines relative to its own, not from the gravitational pull of some cultural or ideological preponderance. This means that even those pursuing Western-style governance structures will see opportunities to engage with China. For these countries, if the United States won’t purchase foreign oil, or the World Bank won’t fund a development project, China will.

China’s Carrot and Stick

The allure of the Chinese alternative is visible in the South China Sea also. In this rather authoritarian region, liberal democratic values are held in lower regard than economic prosperity and political stability. Singapore stands as a shining example that liberalism is not a prerequisite for success in these metrics. To a working class citizen in an underdeveloped province of Indonesia or the Philippines, democracy—or “democrazy” as it is sometimes termed in the region—can seem stultified and inefficient. China, as it would have the world believe, has demonstrated that its model for global engagement achieves results.

China has attempted to satisfy concerns about the nature of its investment and economic policies. The Asian Infrastructure Investment Bank, founded and led by China, is an attempt to increase engagement with countries in the Indo-Pacific region. The AIIB is a signal to countries in the region that Chinese investment isn’t solely for Latin America or Africa. Furthermore, China has been willing to engage in multilateral forums and agreements as it tries to convince its neighbors that its intentions are benign.

However, Beijing has mostly failed in this regard. Chinese military activity has increased in the South China Sea. China’s naval presence in the region has increased dramatically; the Chinese Coast Guard has even escorted fishing trawlers into Indonesian waters. Beijing is working diligently—and successfully—to reduce Taiwan’s international relations.  The Nine-Dash Line (which outlines China’s South China Sea claims) continues to be a significant source of tension; the region is flush with complex, multilateral territorial disputes, any of which could erupt into conflict with little warning. 

China, for its part, never intended to assuage its neighbors’ concerns completely. Instead, China is trying to show that, while it carries a big stick, it can be reasoned with.

Indo-Pacific states are now engaged in a continuous balancing act. Each country is weighing the benefits and costs of their relationship with the established superpower (the United States) against the incipient one (China). While China moves towards the maturation of its hard power, it is perhaps operating within the last phase of biding its time. China has attempted to sell a narrative where it is the reliable power in the Indo-Pacific, rather than a country several thousand miles across the Pacific, from which the echoes of “America first” can be heard.

Alliances are Essential for Maintaining the Status Quo in Southeast Asia

Nevertheless, regional alignment remains with the U.S.—for now. Staring down vociferous Chinese criticism, South Korea placed an American anti-ballistic missile defense system on its soil. Taiwan continues to hedge against a Chinese threat by seeking closer ties with the U.S. as regular arms sales have resumed under the Trump administration. The U.S. has turned a blind eye to Japan’s latent nuclear capabilities and encouraged the evolution of its nominal self-defense force into something more potent.

The United States’ network of alliances in Southeast Asia is intact but fragile. The U.S. must remain credible to each state individually to be credible to all states collectively. Should the U.S. signal a lack of interest—such as by withdrawing from the TPP, publicly questioning the value of a de-facto independent Taiwan, or demonstrating a hesitation to fight alongside South Korea in a conflict with North Korea—its network of alliances may be compromised.

In the twenty-first century battle for influence in the South China Sea, credibility is everything. China currently sees what it perceives as a power vacuum, and it is only too happy to slide into it. Affirming its influence and presence in the Indo-Pacific will be a key U.S. foreign policy objective over the next century. To succeed, the U.S. must act with determination yet delicacy, so that it may maintain the network of alliances that currently safeguards a strategic advantage over an emergent China.  

The Hard Edge of China’s Soft Power was originally published on Global Security Review.

Data breaches seem to be the name of the game in tech this year, and the latest, a software flaw that exposed the private data of hundreds of thousands of Google+ users, has just snagged the spotlight. Despite the fact that data breaches and cybersecurity attacks occur across the globe, their occurrences in major technology markets such as the United States and the European Union (EU) tend to take policy precedence and draw greater media attention.

However, as emerging market nations—such as Indonesia and those in Sub-Saharan Africa—continue to rapidly digitize and foster new technology-based businesses, more attention needs to be paid to the risks these markets and their users face. Failure to do so will significantly hinder economic growth and business development in these regions.

Over 90% of African businesses operate under the cybersecurity poverty line, which means they are unable to adequately protect themselves from vulnerabilities and losses. Although Africa has comparatively limited communications infrastructure, the continent has a high penetration rate of new technologies, and as a result is a prime target for digital attacks. In 2017, cybercrime cost the continent $3.5 billion and yet 96% of online security incidents went unreported. Large and expanding digital hubs such as Nigeria and Kenya particularly suffered, accruing losses of $649 million and $210 million, respectively.

Cybercrime in Africa has targeted startups, corporations, institutions and governments alike. This June, South African insurance company Liberty Holdings Ltd. was held ransom by hackers who were able to access sensitive data including emails. The company is responsible for overseeing 2.5 million life-insurance policies and administering over 10,000 retirement plans and 500,000 individual and institutional investment customers, raising concerns about the consequences of such a hack. Some progress, however, is being made: there was a 73% increase of Information Security Management System certified companies on the continent between 2015 and 2016, the majority of which are based in South Africa, Nigeria and Morocco.

Similarly, in the Asia-Pacific region, cybercrime poses a serious threat to economic success. A study commissioned by Microsoft found that the total potential losses to the region from cyber attacks was $1.745 trillion, or 7% of the region’s current gross domestic product (GDP). These risks are particularly apparent in the ASEAN region, where nations invest an average of 0.07% of their GDP in cybersecurity infrastructure and operations. The consequences of such underfunded and undervalued cybersecurity initiatives can be seen in practice in Indonesia, where the country’s highest valued startup on record, Go-Jek, was found to have significant security vulnerabilities. 

Go-Jek is a ride-sharing and logistics startup that has over 15 million weekly active users and is widely considered a major competitor to global brands such as Uber and Lyft. In March 2017, Fallible, an Indian security firm claimed they were able to extract information such as GPS coordinates of rides and user data such as phone numbers and pick up and drop off points from two problematic APIs on the app. The firm also claimed they were able to exploit a vulnerability which enabled them to manipulate notifications users received. An Indonesian hacker based in Thailand identified similar vulnerabilities in 2016. Go-Jek is Indonesia’s first startup to become a unicorn (meaning it became valued at $1 billion), and over the past year, the company has invested heavily in expanding their services to include mobile payments. 

This expansion into a field that engages with even more sensitive user data underscores the need for a greater cybersecurity focus, as well as a complementary regulatory environment that similarly prioritizes security in tandem with growth. In 2017, the Government of Indonesia took steps in this regard, establishing a National Cyber Agency (NCA) to develop an integrated cyber defense strategy. However, given that in the same year, almost half of Indonesia’s companies were impacted by over 205 million cyber-attacks, costing $34 billion in direct financial losses and long-term reputational damage, there is a great deal of work to be done. 

In larger and more developed technology markets, data security and privacy laws such as the recently passed General Data Protection Regulation (GDPR) compel companies to invest more time and resources into developing and maintaining robust security infrastructure. However, in markets, such as in Sub-Saharan Africa and Asia-Pacific, where such regulations and cybersecurity-focused policy environments are weaker or lacking in enforcement, commensurate practices by businesses are less common.

Going forward, emerging market businesses and governments need to recognize that to achieve economic growth and reap the benefits of the ongoing digital boom, cybersecurity needs to be a priority. In practice, this means that there needs to be greater emphasis on operating and maintaining updated and robust security systems; training and expanding cybersecurity workforces; developing long-term cyber resilience strategies that account for all levels of corporate or institutional operations; raising awareness about the importance of such security practices; and generating legislation that adequately offers protections and remediations. 

Greater investment in regionally-specific cybersecurity infrastructure can also open up noteworthy business opportunities. The cybersecurity market is expected to be worth $2 billion by 2020, and thus far the African continent has not released any commercially viable cybersecurity products, while ASEAN nations, although having made some progress, also have room to grow.

The average cost of cybercrime for businesses and governments across the globe is increasing at a rapid rate, and emerging markets are at significant risk. Developing more robust cybersecurity infrastructure, policies, programs and cultures must be prioritized. This is particularly important now as these regions will soon be host to the majority of global internet users, as well as a large share of future digital businesses and services. 

Cyber Insecurity is Harming Emerging Markets was originally published on Global Security Review.

• The seven largest emerging market countries could grow, on average, around two times as fast as advanced G7 economies.
• Six of the seven largest economies in the world are projected to be emerging economies. In 2050, the global economy will be led by China, with India in second place, followed by Indonesia in fourth place.
• The United States is projected to be the world’s third-largest economy in 2050, based on gross domestic product (GDP).
• The European Union’s share of world GDP could fall below 10% by 2050.
• The U.K. could drop to tenth place, with France potentially cut from the top 10, and Italy falling from the top 20. They are projected to be overtaken by countries with faster-growing economies like Mexico, Turkey, and Vietnam (respectively).

The global economy could more than double in size by 2050, far outstripping population growth, thanks to continued technology-driven productivity improvements. Emerging markets will drive global financial growth, and will progressively increase their share of world gross domestic product, based on an analysis of World Bank economic projection data. The global economy is projected to approximately double in size by 2042, growing at an annual average rate of around 2.6% between 2016 and 2050.

This growth is expected to be primarily driven by emerging market and developing nations, with the Emerging-Seven (E7) economies of Brazil, China, India, Indonesia, Mexico, Russia, and Turkey growing at an annual average rate of almost 3.5% during the next 34 years, compared with an annual average growth rate of 1.6% for the G7 countries of Canada, France, Germany, Italy, Japan, the United Kingdom, and the U.S.

 Half of the seven largest economies in the world are still considered emerging markets.

A continued shift will be observed in international economic power away from high-income advanced economies towards emerging economies in Asia and elsewhere. The E7 could account for nearly 50% of the globe’s gross domestic product by 2050, while the G7’s share of global GDP declines to just over 20%.

China has already overtaken the U.S. to become the world’s largest economy in purchasing power parity (PPP) terms, while India currently stands in third place and is projected to overtake the U.S. by 2050. In terms of PPP, the United Kingdom is projected to. fall to tenth place, France is forecasted to fall out of the top ten, and Indonesia could climb to fourth place by 2050

While looking at Gross domestic product measured at market exchange rates (MERs), one doesn’t see quite such a radical shift in international economic power, representing the lower average price levels in emerging economies.

However, China is projected to be the world’s largest economy by 2030, and India the third largest in the world by 2050. This reveals a considerable and gradual shift in economic power towards Asia and the Indo-Pacific region.

Emerging economies will take center stage by 2050.

By 2050 economies like Indonesia, Brazil, and Mexico are likely to be bigger than those of the United Kingdom and France, while Egypt and Pakistan could overtake Italy and Canada. With regards to growth, Vietnam, India, and Bangladesh may be the most rapidly growing economies from 2015-2050, averaging an increase of around 5% annually.

Nigeria has the potential to be the fastest growing major African economy, and could potentially increase its national gross domestic product ranking from place to fourteenth by 2050. However, Nigeria will only realize this possibility if it can diversify its economy away from oil and strengthen its democratic institutions and national infrastructure.

Poland and Colombia exhibit great potential and are projected to be the quickest growing large economies in their respective regions; Latin America and the E.U. Many emerging economies will be supported by a relatively rapidly growing populations, boosting domestic demand and the size of the workforce.

Investments in education and improved economic freedoms are necessary to ensure there are enough jobs for the growing number of young individuals in these countries, providing a path of sustainable growth for countries with emerging markets and developing economies. 

Today’s advanced economies will continue to have higher average incomes, but developing countries will likely make progress towards eliminating that gap. With the possible exception of Italy, each of the G7 will rank above the E7 states in 2050, based on rankings of projected gross domestic product per capita.

Emerging Economies Will Hold Increasing Amounts of Global Economic Power by 2050 was originally published on Global Security Review.

India’s GDP trajectory over the next 34 years is distinctly separate from its GDP per capita progression, demonstrating that while strong population growth can be an integral driver of Gross domestic product growth, it may also make it more challenging to boost income levels.

Nevertheless, this gap is closing. U.S. Gross domestic product per capita is presently around four times the size of China and almost nine times that of India. By 2050, these openings are projected to reduce to about double China and approximately three times India’s, demonstrating long-term income convergence.

The global economy will slow down with time, with a marked moderation in growth rates following the year 2020. Annual worldwide financial growth will average around 3.5% until 2020, slowing down to 2.7% for 2021-2030, 2.5% for the decade following that, and then to 2.4% for 2041-2050.

This will happen because many advanced economies are experiencing and will experience a marked decline in their working-age population. At the same time, emerging economy growth rates will average out as these economies grow.

Challenges for policymakers in achieving a long-term, sustainable expansion

To realize their full economic potential, emerging market governments must implement structural reforms to improve their macroeconomic stability, infrastructure and institutions, evaluations show the high possibility that emerging economies must grow and thrive in the coming decades.

But to realize this opportunity in total, they must undertake sustained and adequate investments in education, infrastructure, and technology. Worldwide demand growth and falling oil price over latest years have highlighted the significance of savings for long-term sustainable growth. Underlying all this is the requirement to develop political, economic, legal and social institutions to create incentives for innovation and entrepreneurship, making economies wherein to do business.

Looking forward, the global economics faces many challenges to profitable economic growth. Structural developments, like aging populations and climate change, require forward-thinking policies that equip the workforce to be able to make societal contributions later in life while promoting sustainable development.

Falling international trade growth, rising inequality, and increasing economic uncertainties will intensify the need to achieve economies which generate opportunities for everybody in a broad selection of industries. Businesses will need to adopt flexible and proactive approaches to navigate fast-changing and aging markets.

Market developments will create opportunities for business.

These will appear as these economies advance to new industries, to engage with world markets as well as their populations—which will be more youthful on average than in advanced countries—get more affluent.

As these emerging nations develop their institutions, fostering social stability and strengthening their macroeconomics principles, they’ll become more attractive places to conduct business and live, bring talent and investment. These economies are often volatile and quickly evolving, however, so companies will need operating strategies to succeed in them. Businesses should be ready to adjust their brand and market positions to match and preferences.

An in-depth understanding of the local marketplace, policy agendas, and consumer priorities will be crucial. Frequent collaboration with local partners will be essential. One key recommendation is that international companies along with other investors will be patient enough to ride out the short-term economic and political downs and ups which will unavoidably occur every once in a while in markets as they head toward adulthood. However, failure to interact with these markets means missing out on the bulk of the expected global economic development between now and 2050.

Acheiving Sustainable Economic Growth in the E7 was originally published on Global Security Review.