The developing giants shouldn't worry the West

The young Titans of the world economy are growing up. This is something which some people in the mature, industrialised OECD countries tend to view with alarm. In the UK for instance, in the feverish run-up to the general election, there was uproar about a leaked Treasury document that predicted that some of the biggest developing countries would soon overtake some developed economies in terms of size, the UK among them.

This was a manufactured rumpus over a statement of the obvious. Half the world's workforce live in the five biggest developing economies - Brazil, China, India, Indonesia and Russia. They would be getting something pretty badly wrong if they could not grow fast enough for their GDP to catch up with countries like Britain.

Size is irrelevant; what matters is wealth per capita. More worrying is the possibility that integration of countries like China into the world economy will cut either employment or wages within the OECD, especially for people in unskilled jobs. Again, however, it is probably not worth getting unduly concerned. As The World Bank pointed out in yesterday's annual report, the more the developing countries produce and grow, the more of our exports they buy, and the better it is for everybody. We get cheaper clothes imported from China, making us better off as consumers, and they buy more of our goods with the revenues, making us better off as workers.

The people who really have something to fear from increased competition with the Big Five are people living in smaller countries outside the charmed circle of the OECD. The smaller south east Asian tigers in particular have based their economic miracle on exports of cheap manufactured goods. That is just what China can do, except cheaper still and and on a bigger scale. Past experience suggests that countries like Thailand, Malaysia and Singapore can overcome such challenges. But it is they, not the well- heeled West, that should be worrying most about the developing giants.