Unless you are a historian, you may well imagine that the world has always been pretty much as we know it today. The USA is the superpower, big, brash and energetic. Europe is the centre of culture and style and a few counties like Japan and Korea had become successful copying and developing innovations from the West. If you thought like this, then you would be wrong because it hasn’t always been this way.

In the 15^th century China was the most successful country in the world. It had invented gunpowder, printing and the compass and research indicates it sent a great armada of ships to explore the world. Europe ‘woke up’ in the 16^th century and started the colonial expansion that made Europe a superpower. The pendulum swung back to the East in 17^th century by the sheer weight of population so by 1820 India and China produced 50% of the world GDP.

The industrial revolution in the 19^th century swung the pendulum back to the West again and by 1880 the USA became the world’s largest economy. World wars weakened Europe and faster growth occurred in the East particularly Japan and Korea (on the back of US support).

Since the 1980’s, the pendulum has swung again. Growth has been far higher in the East (China and India in particular) triggered by their vast populations, globalisation of trade and more open economic policies. Average incomes in the developing countries have increased dramatically though there is still significant income inequality. The Asian ‘middle class’ (people with a disposable income and aspirations) is expected to be 2.7 billion by 2030.

Perhaps what is different this time is the pace of change. It took Europe 32 years to double output in the 19^th century and it took the US seventeen years to do the same. India and China have done it in ten years.

The World Bank predicts that the East will continue to post annual economic growth rates at least 4% higher than the West. This doesn’t mean the West will stagnate because the ‘world economic pie’ will be getting bigger. It’s just that the East will have a bigger slice.

This swing in economic power brings change and the capacity for tensions to arise. For instance the East buying up resources and companies in the West is viewed as totally reasonable and logical from one perspective but from another it is viewed as a raid on national assets. Changes in immigration patterns as some move from East to West and others move from West to East will also cause tension. In both cases there are degrees of intolerance that have the capacity to boil over from time to time (mainly due to cultural differences or beliefs of “what is fair” or “what is right”).

Political demand for trade barriers in the West and accusations of currency management are on the rise as the impacts of change filter through to communities and individuals. Demand for the East to adopt more equitable and sustainable social, educational and health policies comes from within by a growing middle class, but it also comes from the West.

The pace of growth in any region is not guaranteed and no country will stay ‘top dog’ forever. For instance, higher wages and costs in China means a potential loss of jobs to new low-cost countries like Vietnam and Indonesia. Very rarely is change immediate. It is create by momentum. Like sporting teams, countries must keep investing and developing in the right areas to avoid relegation.

April 2012