The world will benefit economically from growth in China and India



International Energy Agency : Economist, engineer
Rapid economic development in China and India will inevitably push up global energy demand, but it will also bring major economic benefits to the rest of the world.
Economic expansion in China and India is generating opportunities for other countries to export to them, while increasing other countries’ access to a wider range of competitively priced imported products and services. But growing exports from China and India also increase competitive pressures on other countries, leading to structural adjustments, particularly in countries with competing export industries. Rising commodity needs risk driving up international prices for commodities, including energy – especially if supply-side investment is constrained. Commodity exporters would gain most from even faster economic expansion in China and India than assumed in the Reference Scenario. In the High Growth Scenario, the Middle East, Russia and other energy-exporting countries see a significant net increase in their gross domestic product in 2030, compared with the Reference Scenario. GDP growth in other developing Asian countries, the United States, the European Union and OECD Pacific slows marginally, mainly because of higher commodity import costs. Assuming there are no policy changes in major countries, the average IEA crude oil import price rises to $87 per barrel (in year-2006 dollars) in 2030 – 40% higher than in the Reference Scenario. Overall, world GDP grows by 4.3% per year on average, compared with 3.6% in the Reference Scenario. Structural changes in China’s and India’s economies will affect their trade with the rest of the world, including their need to import energy. Light industry and services are expected to play a more important role in driving economic development in both countries in the longer term. The economic policies of all countries will be crucial to sustaining the pace of global economic growth and redressing current imbalances. Rising protectionism could radically change the positive global impact of economic growth in China and India. By contrast, faster implementation of energy and environmental policies to save energy and reduce emissions worldwide, such as those included in the Alternative Policy Scenario, would boost significantly the net global benefits, by reducing pressures on international commodity markets and lowering fuel-import bills for all. More rapid economic development worldwide may also pave the way for faster development and deployment of emerging, clean energy technologies, such as second-generation biofuels and CO2 capture and storage, given the right policy environment.


WEO 2007