LSE Global Governance co-director Professor Danny Quah gave a special Big Questions lecture to Year 9 students on how the world’s economy is shifting eastwards, with countries such as India and China becoming wealthier and more powerful than ever before.
With Who Wants to be a Millionaire?-style voting clickers, tug of war, jumbo pound coins and in-jokes about video games, this was never going to be your usual LSE lecture. Following a lively warm-up and introductions from a rather bashful film crew, Professor Quah took us on a whirlwind tour of the global economy – how trade works, the benefits of economic development for a country, and how economics provides a useful way to interpret the world.
“Did he actually just say ‘Spartans respawning - the mathematics are determinate’?”
Enlisting the help of some brave youngsters plucked from the audience, Professor Quah engagingly demonstrated how the East’s economic power is accelerating and what this means for the West. ‘The Chinese economy is growing at a rate of 10 per cent every year,’ he said, ‘which means it’s doubling in size every seven years. At this rate, our volunteer here would be 10ft tall by the time he enrols at LSE.’
We witnessed, via a striking world map on the big screen (plus a game of tug of war, just for good measure), how the emergence of the East in the last 30 years has pulled the world’s economic centre of gravity nearly 5000km from its 1980 mid-Atlantic location towards India and China.
But what does that mean for us? Well, we get an awful lot of ‘cheap stuff’. We watched a time-lapse video of a day in the life of a teenager called Charlie, who sped between his X-box (£220), PC (£330), and kicking his football (£10). All of these products were made in China. Then we learned just how much more expensive they would cost if they had been made in the UK: a whopping £3,200 for a PC, £1,760 for an Xbox, and £80 for a football.
So, the East might be making a lot more ‘cheap stuff’ than the UK, but we are getting pretty good at using innovation expertise and global collaboration to create our own products. To prove this point, award-winning entrepreneur Michael George took to the stage to describe how his new product – ‘the first ecological designer light bulb’ – was designed by his company in the UK but manufactured in China with US technology.
Despite the East’s rapid growth, its vast population – there are 50 people in East Asia for each person in the UK – means it has some catching up to do in respect of personal prosperity, as the average individual income remains at the same level as Namibia and Azerbaijan, with many people living on just 70p a day. Nevertheless, Professor Quah concluded that asking ‘East beats West?’ is the wrong question, as the rise of the East has led to ‘the world being immeasurably better off. We need economics to help improve the lot of humanity. That is what economics is about.’
Read Professor Quah’s article ‘The Great Shift East‘.