India tops list of fastest growing economies for coming decade
India tops the list of the fastest growing economies in the world for the coming decade and is projected to grow at 7.9% annually, ahead of China and the US, according to Center for International Development (CID) at Harvard University's report. "India has made inroads in diversifying its export base to include more complex sectors, such as chemicals, vehicles, and certain electronics," it said.
The report said that India's productive capabilities far exceed expectations for its current income level, which contributes to the projection of rapid growth for the coming decade. The researchers also find India ranks the best on the criteria termed the Complexity Opportunity Index (COI), which measures how easy it is to redeploy existing knowhow to enter new complex products.
"India's existing capabilities have not only diversified its exports, but also allow for easy redeployment into related products that depend on those capabilities, making further diversification relatively easy," the report said.
The top ranking in COI means India has many "unrealized opportunities" to diversify into related, high-value sectors to continue to drive productivity growth and job creation. "Up to now, that potential remains unrealized, however, as India's complexity has not changed over the past decade. The rapid growth that is predicted is effectively capitalizing on previous gains in complexity," the report added.
India's other major challenge will be to ensure the inclusive nature of this productive transformation, as the gains made in new chemical, vehicle, and electronics exports are highly concentrated in specific localities of the subcontinent. "Whether that knowhow can be disseminated into new areas of India will in part determine whether rapid growth can be sustained in the long-term," it said.
Uganda comes second on the list of fastest-growing economies to 2026, predicted to grow at 7.5% annually. Growth projections are based on economic complexity, a single measure of each country's economy which captures the diversity and sophistication of productive capabilities embedded in a country's exports. "China is projected to grow at 4.9% annually to 2026, the US 3% and France 3.5%," report said.
The report further noted that after a decade of growth driven by record oil and commodity prices, the researchers find a landscape that has shifted in favor of more diversified economies. In sub-Saharan Africa, growth is shifting eastward from commodity-driven West Africa to East Africa, with Uganda, Tanzania (4th), and Kenya (10th) in top 10 predicted fastest growing countries globally for the coming decade.
The researchers further point out that many low-income countries, including Bangladesh, Venezuela, and Angola have failed to diversify their knowhow and face low growth prospects. "Others like India, Turkey, and the Philippines have successfully added productive capabilities to enter new sectors and will drive growth over the coming decade," said Sebastian Bustos, a lead CID researcher in trade and economic complexity methods.