Section 2 Present and future of emerging economies
1. Economic growth rate
First, we will look at emerging economies’ growth potential.
Between 2003 and 2013, the average annual growth rate (in terms of real GDP growth rate) was
nearly 5% for all emerging-economy income groups (low-income, lower-middle-income and uppermiddle-income economies), compared with an annual growth rate of 1.5% for high-income economies
(Figure I-2-2-1-1). The average growth rate for upper-middle-income economies was 4.9%, the highest
of all emerging-economy income groups, followed by 4.8% for lower-middle-income economies and
4.7% for low-income economies.
The average income (GNI) per capita for emerging economies is less than a fifth of the average for
high-income economies. However, given that the population size and economic growth rate of emerging
economies are far higher than those of high-income economies, emerging economies’ economic
potentials cannot be ignored.
Figure I-2-2-1-1 Economy growth rate by income group
Real GDP growth rate (annual rate)
Average from 2003 to 2013
High-income
economies
1.3 billion people
Average 37,000
dollars
Upper-middle-income Lower-middle-income
economies
economies
2.4 billion people
2.6 billion people
Average 7,000 dollars Average 2,300 dollars
Middle-income economies
5 billion people
Low-income
economies
800 million people
Average 600 dollars
Emerging economies
5.8 billion people
Notes: Figures in the items above represent population sizes and national income levels (GNI per
capita) as of 2013.
Source: World Population Prospects: The 2012 Revision (United Nations), WDI (World Bank).
(1) Changes in the average growth rate
A look at long-term changes in the economic growth rates of emerging economies by income group
shows that a significant change occurred around 1990, when economic globalization started to advance
(Figure I-2-2-1-2).
First, we will look at annual changes in the average growth rate by income group since 1965 in terms
of the coefficient of variation (standard deviation ÷ mean). The co-efficient of variation for high-income
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economies has risen significantly since 1990, when economic globalization started to advance. This
indicates that annual changes in the average growth rate have been becoming larger in recent years in
high-income economies.
In contrast, the coefficients of variation for upper-middle-income and lower-middle-income
economies have not significantly changed, meaning that the growth rates for both groups of economies
since 1990 has stayed at around the pre-1989 levels. From this, it may be said that upper-middle-income
and lower-middle-income economies have been maintaining stable growth over the long term.
The coefficient of variation for low-income economies has declined significantly since 1990,
indicating that annual changes in the average growth rate have become smaller than before 1989. It may
be said that although their growth rate is still higher than the growth rate of upper-middle-income
economies, lower-middle-income economies are gradually getting on a path of more stable growth.
A similar trend is observed among oil-producing countries9.
As shown above, since 1990, the annual economic cycle swing has tended to become smaller in
emerging economies and oil-producing countries, whereas in high-income economies that bore the brunt
of the Lehman Shock, the annual economic cycle swing has become larger than before 1990.
Figure I-2-2-1-2 Changes in average growth rates
(Coefficient of
variation)
Comparison of changes in annual average growth rates
(coefficient of variation) between the period before 1980
and the period after 1990
Coefficient of
variation of all
income groups
(from 1990 to
2013)
Coefficient of
variation of all
income groups
(from 1965 to
1989)
High-income
economies
UpperLowerLow-income Oil-producing
middlemiddleeconomies
countries
income
income
economies
Notes: 1. Coefficient ofeconomies
variation of average
annual growth rates of income groups between the
periods; Coefficient of variation = standard deviation / mean
2. Income groups include oil-producing countries.
Source: WDI (World Bank).
(2) Growth inequality within income groups
9
Oil-producing countries as referred to here are those which have recorded a daily export volume of 100,000
barrels or more according to recent data (regardless of the income group).
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Meanwhile, if we look at the differences in the average growth rates for income groups in terms of
the coefficient of variation, we can see that the value of the coefficient varies significantly from income
group to income group and from time to time. A similar trend is observed among oil-producing countries.
However, since 2008, the year of the Lehman Shock, the coefficient of variation has declined
significantly for oil-producing countries and all income groups, indicating that their growth rates have
been converging around the lowest-ever level (Figure I-2-2-1-3).
These trends suggest that economies around the world, including emerging economies and oilproducing economies, have been becoming increasingly interconnected with each other.
While there are presumably various factors behind the increasing interconnection, the widespread
economic globalization, including in emerging economies, has had a great impact.
In other words, behind the increasing interconnection is the fact that because of the advance of
globalization, economic mutual dependence between emerging economies and between high-income
economies and emerging economies has grown, with the result that economic cycle swings now spread
throughout countries and regions around the world without a time lag.
Figure I-2-2-1-3 Growth inequality within income groups
(Coefficient of
variation)
High-income economies
Upper-middle-income economies
Lower-income economies
Low-income economies
Oil-producing countries
(Year)
Notes: 1. For each income group, when the growth rates of countries and regions are four times
larger than the standard deviation of target income groups, such countries and regions
are excluded as outliers.
Coefficient of variation = standard deviation / mean; Three-year moving average
2. Income groups include oil-producing countries.
Source: WDI (World Bank).
2. Income per capita
As was already shown, although the average income (GNI) per capita in most emerging economies
is less than a fifth of the level in high-income economies, it has been growing significantly since the
2000s. The high growth has been continuing in upper-middle-income economies in particular, bringing
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the average income there above 7,000 dollars in 2013 (Figure I-2-2-2-1).
A look at the distribution of upper-middle-income economies and high-income economies in terms
of income per capita shows that whereas the former group is concentrated in a relatively narrow income
range between 4,000 dollars and 13,000 dollars, the latter group is distributed very widely across income
brackets above 13,000 dollars, including those above 70,000 dollars. Consequently, there is a wide gap
between the two groups in the average income level (Figure I-2-2-2-2).
However, despite the very wide range of distribution for high-income economies, around half of
those economies are concentrated in income brackets of less than 27,000 dollars. Therefore, if some
high-income economies are excluded, the gap between the two groups is not so wide as is the case when
compared on an average basis.
A similar comparison between lower-middle-income economies and upper-middle-income
economies shows that these two groups of economies are distributed in a similar way (Figure I-2-2-23).
Figure I-2-2-2-1 Changes in income per capita
GNI per capita
Upper-middle-income economies
Lower-middle-income economies
Low-income economies
High-income economies
(Year)
Notes: Figures show simple average values of countries and regions constituting income groups.
Source: WDI (World Bank).
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4,000 dollars or less
4,000 - 5,000 dollars
5,000 - 6,000 dollars
6,000 - 7,000 dollars
7,000 - 8,000 dollars
8,000 - 9,000 dollars
9,000 - 10,000 dollars
10,000 - 11,000 dollars
11,000 - 12,000 dollars
12,000 - 13,000 dollars
13,000 - 14,000 dollars
14,000 - 15,000 dollars
15,000 - 16,000 dollars
16,000 - 17,000 dollars
17,000 - 18,000 dollars
18,000 - 19,000 dollars
19,000 - 20,000 dollars
20,000 - 21,000 dollars
21,000 - 22,000 dollars
22,000 - 23,000 dollars
23,000 - 24,000 dollars
24,000 - 25,000 dollars
25,000 - 26,000 dollars
26,000 - 27,000 dollars
27,000 - 28,000 dollars
28,000 - 29,000 dollars
29,000 - 30,000 dollars
30,000 - 31,000 dollars
31,000 - 32,000 dollars
32,000 - 33,000 dollars
33,000 - 34,000 dollars
34,000 - 35,000 dollars
35,000 - 36,000 dollars
36,000 - 37,000 dollars
37,000 - 38,000 dollars
38,000 - 39,000 dollars
39,000 - 40,000 dollars
40,000 - 41,000 dollars
41,000 - 42,000 dollars
42,000 - 43,000 dollars
43,000 - 44,000 dollars
44,000 - 45,000 dollars
45,000 - 46,000 dollars
46,000 - 47,000 dollars
47,000 - 48,000 dollars
48,000 - 49,000 dollars
49,000 - 50,000 dollars
50,000 - 51,000 dollars
51,000 - 52,000 dollars
52,000 - 53,000 dollars
53,000 - 54,000 dollars
54,000 - 55,000 dollars
55,000 - 56,000 dollars
56,000 - 57,000 dollars
57,000 - 58,000 dollars
58,000 - 59,000 dollars
59,000 - 60,000 dollars
60,000 - 61,000 dollars
61,000 - 62,000 dollars
62,000 - 63,000 dollars
63,000 - 64,000 dollars
64,000 - 65,000 dollars
65,000 - 66,000 dollars
66,000 - 67,000 dollars
67,000 - 68,000 dollars
68,000 - 69,000 dollars
69,000 - 70,000 dollars
Figure I-2-2-2-2 Distribution of GNI by income group (1)
(Number of countries
Distribution of GNI by income group
and regions)
(High-income economies vs upper-middle-income economies in 2012)
Average of upper-middle-income
economies: 7, 000 dollars
Half of the high-income
economies are concentrated on
27,000 dollars.
Upper-middle-income economies
High-income economies
Average of high-income economies:
37, 000 dollars
Notes: Distribution of GNI per capita by country or region in 2012.
Total number of high-income economies: 49 countries and regions; Total number of uppermiddle-income economies: 51 countries and regions.
Source: WDI (World Bank).
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Figure I-2-2-2-3 Distribution of GNI by income group (2)
Distribution of GNI by income group
(Number of (Higher-midde income economies vs lower-middle-income economies in 2012)
countries and
Lower-middle-income economies
Average of upperregions)
middle-income
Upper-middle-income economies
economies: 7,000 dollars
Average of lower-middle-income
10,000 - 15,000 dollars
7,500 - 10,000 dollars
6,000 - 7,500 dollars
5,000 - 6,000 dollars
4,300 - 5,000 dollars
3,600 - 4,300 dollars
3,000 - 3,600 dollars
2,500 - 3,000 dollars
2,000 - 2,500 dollars
1,500 - 2,000 dollars
1,000 - 1,500 dollars
500 - 1,000 dollars
500 dollars or less
economies: 2,300 dollars
Notes: Distribution of GNI per capita by country or region in 2012.
Total number of high-income economies: 51 countries and regions; Total number of uppermiddle-income economies: 45 countries and regions
Source: WDI (World Bank).
3. Total population
According to an estimate by the United Nations, population growth will continue until 2020 in most
emerging economies (Figure I-2-2-3-1).
However, in 2020 and beyond, population growth is expected to almost come to a halt in uppermiddle-income economies, and in 2040 and beyond, the growth is expected to come to a halt in lowermiddle-income economies as well. Population growth is expected to continue in 2040 and beyond only
in low-income economies.
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Figure I-2-2-3-1 Expected population growth rate
2010
Expected population growth from 2010 to 2020 (annual rate)
Expected population growth from 2020 to 2040 (annual rate)
Expected population growth from 2040 to 2050 (annual rate)
High-income
economies
Upper-middleLower-middleincome economies
income economies
Middle-income economies
Emerging economies
Low-income
economies
Source: World Population Prospects: The 2012 Revision (United Nations).
4. Aging of population
The aging of population is expected to advance rapidly in the future not only in high-income
economies but also in emerging economies.
Figure I-2-2-4-1 shows projections of the future working age-population and elderly population by
income groups based on data prepared by the United Nations.
The figure shows that while the working-age population is expected to start declining after remaining
flat until 2040 in upper-middle-income economies, the elderly population is expected to grow rapidly
from now on.
Meanwhile, in lower-middle-income economies and low-income economies, while the working-age
population is expected to continue growing, the elderly population is also expected to increase.
As a result, in many emerging economies, the elderly population is expected to grow rapidly from
now on. In upper-middle-income economies in particular, the aging of the population is expected to
advance rapidly, as the working-age population is expected to start declining after staying flat.
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Figure I-2-2-4-1 Expected working-age population and elderly population
(100 million people)
Working age-population
Elderly population
High-income
economies
Upper-middle-income Lower-middle-income
economies
economies
Low-income
economies
Source: World Population Prospects: The 2012 Revision (United Nations).
Next, we will look at the progress in the aging of population by income group.
Figure I-2-2-4-2 shows projections of the future proportion of the elderly population by income
group based on data prepared by the United Nations. As defined by a report prepared by the United
Nations, a society is regarded as “aging” if people aged 65 or older (the elderly population) account for
more than 7% of the population, as “aged” if the proportion of such people is higher than 14% and as
“super-aged” if the proportion is higher than 21%.
According to these definitions, upper-middle-income economies, which are already “aging”
societies, are expected to turn into “aged” societies by 2040 and into “super-aged” societies by 2050.
Lower-middle-income economies and low-income economies are expected to turn into aging societies
by 2040 and by 2050, respectively.
63
Figure I-2-2-4-2 Expected proportion of elderly population
2013
Expectations in 2040
Expectations in 2020
Expectations in 2050
Super-aged
society
(>21%)
Aged
society
(>14%)
Aging
society
(>7%)
Upper-middleLower-middleincome economies income economies
High-income
economies
Middle-income economies
Low-income
economies
Emerging economies
Source: World Population Prospects: The 2012 Revision (United Nations).
Meanwhile, healthcare expenditure per capita in upper-middle income economies, which are already
aging societies, has increased rapidly since the 2000s, when per-capita income there started to rise
(Figure I-2-2-4-3).
In line with increases in income per capita and the share of the elderly population, healthcare
expenditure is also expected to grow rapidly in the future in other emerging economies where the growth
is still low.
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Figure I-2-2-4-3 Changes in healthcare expenditure per capita
(100 dollars)
Upper-middle-income economies
Lower-middle-income economies
Low-income economies
(Year)
Source: WDI (World Bank).
5. Urbanization
Urbanization is rapidly advancing in emerging economies as well.
Figure I-2-2-5-1 shows the urbanization rate and the urban population growth rate by income group
in 2013.
The figure shows that the share of residents in urban areas (urbanization rate) in the total population
is higher than 60% in upper-middle-income economies. The urbanization rate is nearly 40% in lowermiddle-income economies and around 30% in low-income economies.
Behind the high urbanization rates are rapid population inflows into urban areas.
The ratio of population inflow into urban areas to the urban population in the previous year was
0.8% (2013) in high-income economies, meaning that the population inflow has almost come to a halt.
However, the ratio remains at high levels, ranging from 2.3% to 3.9%, in emerging economies.
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Figure I-2-2-5-1 Urbanization rate and urban population growth rate
Urbanization rate in 2013
Urban population growth rate in 2013 (right scale)
High-income
economies
Upper-middleLower-middleincome economies income economies
Middle-income economies
Emerging economies
Low-income
economies
Source: World Urbanization Prospects: The 2014 Revision (United Nations), World Development
Indicators (World Bank).
According to an estimate by the United Nations, the urbanization rate will continue rising for all
income groups. In upper-middle-income economies in particular, the rise in the urbanization rate is
projected to accelerate in the future (Figure I-2-2-5-2).
Consequently, the urbanization rate in upper-middle-income economies is expected to reach 80% in
2050, close to the levels in high-income economies.
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Figure I-2-2-5-2 Expected urbanization rate
High-income economies
Upper-middle-income economies
Lower-middle-income economies
Low-income economies
Source: World Urbanization Prospects: The 2014 Revision (United Nations).
(Year)
6. Simultaneous advance of aging and urbanization
Figure I-2-2-6-1 shows past changes and estimated changes in the urbanization rate and the share of
the elderly population by income group in the period up to 2050 based on data prepared by the United
Nations.
According to this figure, urbanization has already advanced in high-income economies and since the
1970s, the pace of urbanization has been slowing down. Meanwhile, the pace of aging of population is
expected to accelerate over the coming years, with a time lag behind the advance of urbanization.
On the other hand, in emerging economies, urbanization and aging of population are expected to
advance simultaneously over the coming years.
In upper-middle-income economies, urbanization is expected to continue advancing rapidly until
around 2030, whereas aging of population is expected to accelerate in 2020 and continue afterwards.
In lower-middle-income economies, while urbanization is expected to continue advancing over a
long period of time, aging of population is expected to accelerate in 2020 and beyond.
In low-income economies, while urbanization is expected to continue advancing over a long period
of time as it is in lower-middle-income economies, aging of population is expected to advance in 2030
and later.
As a result, emerging economies are confronted with the difficult challenge of dealing with aging of
population and urbanization at the same time.
This also means that in emerging economies, there will be two huge markets, one for services in the
medical and healthcare sectors as a solution for aging of population and the other for infrastructure
development as a solution for urbanization.
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Figure I-2-2-6-1 Expected urbanization rate and proportion of elderly population
High-income economies
Upper-middle-income economies
Urbanization rate
Elderly population rates
(RHS)
Urbanization rate
Elderly population rates
(RHS)
(Year)
Lower-middle-income economies
(Year)
Low-income economies
Urbanization rate
Urbanization rate
Elderly population rates
(RHS)
Elderly population rates
(RHS)
(Year)
Source: World Urbanization Prospects:The 2014 Revision (United Nations).
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(Year)