Travel speed of economic power from west to east increase. The rich world will lose some privileges.
Quarry Bank Mill is a beautiful brick building with five levels, located on Bollina valley near Styal, a typical English village of a few miles from Manchester. It was built in 1784 by merchant Samuel Greg, who made a good profit by providing them with the Lancashire weavers of cotton yarn needed. Raw cotton was brought from the slave plantations of America and processed with the most modern inventions of the time, wet spinning machine of Richard Arkwright. Later, Greg expanded the factory and installed a steam engine, powered by coal, to increase the power provided by Bollina river. These investments have produced a quantum leap in productivity: in 1700, a spinner wheel with a pedal operated 200 hours needed to produce a pound of yarn (about 453 g). By 1820, he would have needed more than an hour.

Half-half.
Greg's Mill was part of an industrial revolution that profoundly altered the world hierarchy. New technologies - inventions that led to savings of labor, factory production, fossil fuel engines - have spread to other parts of Western Europe and then America.
First industrialized countries (along with some that were later developed, such as Japan) have managed to advance and protect this foundation to build on new technologies and living standards.

"The great divergence" between the West and the rest took about two centuries. Mill at Styal, once one of the largest in the world, became a museum. Some looms, operated the mill wheel, still produce kitchen towels gift shop, but cotton production moved much abroad, in search of lower wages. Currently, another historical shift shake global hierarchy. It is a "convergence" in terms of living standards, which take place once the poorer countries to adopt more high-speed technologies, know-how and policies that have enriched the West. China and India are the largest countries with the fastest growth in this category comes last, but the boom in emerging markets was widespread and included Latin America and Africa.

And the pace is accelerating convergence. Debt countries that impede the United States had insufficient growth after the financial crisis. Emerging economies, which have escaped the carnage with a few bruises, they spent much of last year trying to control economic boom. IMF projections show that emerging countries taken together will increase by about four percentage points more than the rich - both this year and the next. If the IMF will be right, emerging markets (as defined Fund) will be responsible in 2013 for more than half of world production, measured by purchasing power parity (PPP).
One of the signs of economic power movement is that investors expect trouble in rich countries, but they seem convinced that the emerging markets crisis will not occur. Many believe that the old rich people, downtrodden and debt of ideas - in emerging markets compared to the young, energetic and high rates of saving. The truth is more complicated. One of the reasons why companies emerging areas are keen to establish a bridgehead in rich countries is the business climate, more friendly than at home. But the recent series of financial collapses in the rich world does seem prone to crises.

Rich hangover.
Mess with subprime mortgages in America, it has been transformed into financial disaster known, features a crisis was developing world: large capital flows, channeled by banks to less regulated lenders from two plan to finance a boom real estate. The speed with which bond investors have turned to Greece, Ireland and Portugal was reminiscent of the love of gain from an emerging economy, borrowed excessively.

Because there is yet another emerging market bond market any liquid and reliable enough that you can escape, fearful investors have put money into U.S. Treasury securities and other shelters in some rich countries. There are so few options, that even lowering the debt rating of last summer the U.S. government has given an impetus for the purchase of U.S. Treasury securities, just as it was scoffed at. Indeed, emerging markets also hunger safe and liquid bonds is one of the most profound causes of the series of crises that have plagued the rich world. Developing countries have bought the bonds of governments in rich countries (stored as reserves) as insurance against future crises. These acquisitions have put pressure on interest rates for long term aţâţând lending boom that included public and private.

Today, GDP growth is vacillating like a hangover after the boom and add a feeling of malaise in the wealthy world. Many families in America, Britain and elsewhere began to make drastic savings to reduce their debts. Those who have money to spend, including companies, they take two hands to have a support for an uncertain future. A new breed of multinational companies in emerging regions, used to a tough business environment at home, seem to be more willing to invest in the rich world than most Western companies, which have lost their spark.

Grandeur and decline.
Those who grew up in America and Western Europe have grown accustomed to the idea that the West dominates the world economy. In fact, it is unusual that a group of 30 different countries, where a small fraction of world population, always making cards. For most of human history, economic power was determined by demographics. In 1700, the largest economy in the world (and the largest producer of cotton) was India, with a population of 165 million people, followed by China with 138 million. 8.6 million British people contribute less than 3% of global production. Even in 1820, when the industrial revolution was in full swing in Britain, the two Asian giants contributed to half the world GDP.

The spread of these manufactures specially constructed, how Quarry Bank Mill, the economic power and population separately, and still growing at a rate increased when the West became rich. To be able to do ever more with fewer workers meant that even a small country could become an economic giant. In 1870, the average income of the British Isles had six times higher than in India or China. But on the verge of World War I, British per capita income was exceeded by that of America, the great power of the twentieth century.
America remains the largest economy in the world, but its status is threatened by the revival of China. Looking back, changing the destiny of this country seems to have occurred east in 1976, the U.S. bicentennial year and the death of Mao Tzedun. By then, China's per capita income had fallen to 5% of that in America, partly because of extreme social and industrial policies of Mao.

Average Indian was a little richer than the average Chinese. And China, and India had returned to the inside, isolating the flow of ideas and goods from Japan and other countries had less populated Asian economies some rich. Like the Chinese, the Indian economy was a closed generally. Huge industries were protected from foreign competition by high import tariffs, which are held in a state of dying.

Emerging optimism.
China was the first to change course. In 1978, Deng Xiaoping party won approval for a set of economic reforms that opened China to trade, technology and foreign investment. India's liberalization takes place a little later, in 1991. China and India's GDP is now many times greater than that in the mid 70s. For both economies, growth rates of 8% are considered normal. Living standards are still sixth in China and India paisprezecime than in America in terms of the PPP, purchasing power, but the gap is already much smaller and reduce visible.

Moreover, convergence has spread beyond India and China. Three quarters of the largest non-producer of petroleum poor countries have enjoyed a per capita income growth faster than in America during 2000-2007, explained Arvind Subramanian of the Peterson Institute for International Economics in his new book, " Eclipse: Living in the Shadow of China's Economic Dominance ". Compared with only 29% during 1960-2000. And these savings come from behind at a faster pace: the average growth of GDP per capita was 3.3% faster than the rate of growth in the U.S. 2000-2007, more than twice the difference of the four previous decades.

If emerging markets remains plus three percentage points from America (a conservative estimate), they will cover two thirds of world production in 2030 estimated Subramanian. Four of the most populated emerging countries today - China, India, Indonesia and Brazil - will be responsible for two fifths of global GDP measured by purchasing power parity. Combined weight of America and the European Union in the global economy will be reduced from one third to less than a quarter.

Economic recovery is accelerating. British economy has doubled in size in the 32 years between 1830-1862, once the high productivity and the spread of the cotton industry to other areas. U.S. GDP has doubled in just 17 years, when Britain passed in the 1870s. Chinese and Indian economies have doubled in a decade.

Here's a reason for optimism. An Indian who graduated from university some access to world-class assets to his parents (who may have saved for decades for a scooter rattle) could only dream of. The recent jump in revenue is visible Chinese cities, where cars are new, but bikes seem ancient or futuristic view of skyscrapers in Shanghai's financial district.

Three fears.
China is still a relatively poor country, but because of population size, is already the second global economy if we measure in dollars. May exceed America and reach the world's largest economy in the next decade, a prospect that has raised much concern in the United States. In general, it concerns the impact of emerging markets rise on jobs, salaries and cost of credit in the rich world.

The first one concerns direct link to the competition for things that are found in quantity more or less fixed: geopolitical supremacy, oil and raw materials, status and marginal benefits derived from the position transmitter of a reliable international currency. For most people, most of the time, owned the country place their classifications military power is not important. Hunger for natural resources of the world emerging on the other hand, and put the consumers in the rich world in a bad situation because very palpable pushed up prices of oil and other commodities. Increasing use of China's yuan is an outside threat (since removed) the central role of the dollar in international trade and finance. If the dollar will be eventually pushed aside, Americans will become poorer, and their lending costs will rise.

A second set of anxiety related to job security and wages. Strong commercial ties growing between rich and developing countries are willing to assume a regrouping of the division of labor throughout the world, creating new jobs and destroying or moving old ones. Of manufacturing jobs that require no special training and those with average training services that can be provided by electronic means, have been outsourced to cheaper suppliers in China, India and other places (in fact, China is now rich enough to be vulnerable to loss of jobs for Vietnam and Indonesia). Outsourcing threat puts pressure on wages, which are pulled down, although most studies suggest that U.S. trade is only slightly responsible for increasing income inequality.

The third concern, which is in disagreement with the first two, is that emerging markets are prone to crises that could destabilize a still fragile global economy. Slow growth in GDP in the rich world means that developing countries must rely on their domestic spending, something that did not get it to manage it in the past. Which multiplies the risks of excessive spending, excessive lending and inflation - which have raised and another time crisis in emerging markets. Even if such extreme situations can be avoided, emerging markets are prone to sudden slowdown pace, once they become rich and trick with bringing unemployed migrants from rural areas and stable their employment in various jobs in the city become more difficult to repeat . It's hard to believe that growth rates in the recent past will be maintained.

Anxiety and status.
Few experts expect America to be poorer in the next 10 or 20 years than now. Is it this gloomy but ultimately hangover after the financial crisis and unemployment will be reduced. Western Perspective is a relatively rich country economic decline, not an absolute failure in terms of living standards (though some people will carry their worst). Thing that matters at the political level, because most people measure their wealth relative to others rather than to the absolute level of their income.

The effect of loss of status of head of pack on the welfare of the average American does not seem to be devoid of meaning. British sensation experienced similar in the early twentieth century, noting the rise of Germany, a military rival. United Kingdom seem stuck on old industries - such as textiles and steel - while the Germans progressed to areas such as electricity and chemistry. The fact that the country was still a better financial situation in absolute terms was only a poor consolation. The nation's mood contrasted sharply with the triumphalism of the mid-nineteenth century, explains Nicholas Craft Warwick University. A wave of protectionism hit the free-trade consensus that prevailed in 1846 (when the British Parliament passed the state commercial code free trade across the border - no). Consensus resisted, but not to divide the Conservative Party, which lost the 1906 elections to the Liberals.

No country or group of countries do not always remain ahead. Historical and economic theory suggests that, sooner or later, others will come last. But we should not rely on linear extrapolation from past growth rates. Instead, we can say that the transfer of economic power from rich countries to emerging markets will last rather longer than commonly believed. Rich countries would be cursed if they did not even manage to reach the occasional moments of growth. China, for its part, will be lucky if you avoid dangerous falls in the next 10-20 years. I forget too quickly the crises in emerging markets, making them more likely in the future.

Social security and education will have to adapt to a world where jobs will continue to be created and moved at a rapid pace. The cost of oil and other commodities will continue to grow faster than other prices, changing terms of trade for countries rich in resources, scaring off large consumers like the United States of America. Finally, the yuan will become an international currency and will rival the dollar. The longer this process takes, the less pressure to control public finances, and America will feel the more likely eclipse the dollar will be sudden and disorderly.

The force of economic convergence between countries depends on income gap in developing and developed. It is easy to grow from poor to less poor. Really difficult part is to make the leap from an average income reasonably rich one. Can China and the other for her to handle this situation?