The rise of emerging markets, most notably the 'BRICs', is seen by most as a relatively recent phenomenon dating back only two decades or so. In reality, rapid growth in the developing world is part of a 100-year process that is only halfway done, says Nobel Prize winner Michael Spence, author of The Next Convergence: The Future of Economic Growth in a Multispeed World.
Starting with post-war Japan, continuing with South Korea and then moving onto Singapore, Hong Kong, etc. Asian countries have been steadily modernizing and raising their standard of living for the last 50 years, says Spence, a professor at NYU Stern School of Business.
What's the key? It all starts with the people, Spence tells Aaron Task and Daniel Gross in the accompanying video. "The discovery in Asia that wealth creation was going to be based on human beings, on human capital" was the key to their growth, he says. Fostering the human capital in these countries has allowed them to create the infrastructure, technology and education systems needed for economic expansion. Spence says these principles which started with Japan and are now catching on in more Asian nations, most notably in India, South America and even Africa and will continue to do so for the next 50 years or so.
What does this mean for America?
In its simplest form, "We're looking at people joining us in the advanced country world," which Spence believes translates into a different but positive economic future for America. "We have to get used to not being dominate anymore" but overall the globalization tide will lift all boats and perhaps lift America's the most.
What has made America dominant -- a "flexible, innovative" economy -- will continue to benefit it in the future, he says.