Vijay Eswaran on Why the Concept of the “Economic Superclub” Might Be Outdated

Vijay Eswaran

Vijay Eswaran, executive chairman of the QI Group in Hong Kong, has a unique perspective in evaluating the role of "emerging" economies on a global scale.

Growing up in Malaysia but educated in the United Kingdom and the United States, Eswaran has seen firsthand how the post-Cold War era affected both what are considered developed countries as well as those that are not.

And his perspective is that top-down superpower structure and the "economic superclub" that it creates are antiquated in a rapidly changing global economic dynamic, a dated paradigm that needs to change with the times.

The "digital nomad life," Eswaran wrote in an op-ed, "leads us to question what being an economic superpower in this day and age even means and what these shifts mean for the future of the global economy."

Dawn of an Era

Between the end of World War II and the fall of the Soviet Union in the late 1980s into the early 1990s, a dueling struggle defined world events and economic behavior. On one end was the Soviet Union, battered from World War II but now in control of a massive bloc of countries it would engulf in its Communist (not to be mistaken with Socialist) governance in Eastern Europe and Southeast Asia.

On the other end was the Western Bloc, led by the United States and encompassing most of Western Europe and North America. Those entities supported a democratic economic and political dynamic, although they often partnered and sided with anti-Communist and even authoritarian regimes if they served the bloc's greater political and economic goals.

These alliances brought several proxy wars, a lot of election interference, and the concept that emerging economies were to be used as chess pieces for the greater Cold War struggle.

Since the end of the Cold War - call it 1990 - the global power structure for nation-states has mostly revolved around a singular "superpower," the United States, and its fellow developed countries pursuing economic, military, and even social policy abroad, mostly unchecked.

And that narrative has mostly held, even amid the creation of economic clubs such as the G7, a collection of the world's largest and most dynamic economies, and G20, a more diverse group of countries more dispersed in their economic weight.

But according to Eswaran, who articulated his thoughts in an op-ed, this logic is no longer valid.

"The large [gross domestic products], strong military, and global influence of the G7 group have led to their position as the dominant economic superpowers," Eswaran wrote. "However, this position was based on the Cold War era, when the world was divided into two rival blocs. In the post-Cold War era up to the present day, the landscape of economic superpowers has become more complex, as the factors that contribute to a country's economic power are constantly evolving."

No Longer a Hegemon

Eswaran states that two primary factors have converged to facilitate this sea change. First, he says the primary narrative of what constitutes a "developing country" is no longer accurate.

"The emerging economies are typically characterized by rapid economic growth, high levels of poverty, and a large youth population," Eswaran stated. "The developed economies are characterized by high levels of income and wealth, a well-educated population and a stable political system.

"However, this divide is becoming increasingly outdated. Many emerging economies are now growing faster than developed economies and they are also making significant progress in terms of poverty reduction and education."

That first element should be considered progress, with the gap between the "haves" and the "have nots" narrowing and millions of people lifted (and lifting themselves) out of poverty via economic growth.

The second element, tragically, is less about economics and standard of living improvements other countries have made and more about the stagnation and even regression of American influence on the global stage.

Vijay Eswaran points to multiple long-creeping issues in the United States that have, for a variety of reasons both within the country and outside of it, reared their fearsome heads.

Those include, but are not exclusive to, an ever-widening income gap between the top owners of wealth and everyone else; the associated decline in the proverbial "middle class" because of that gap; and a growing national debt and a political system that has bucked its traditional norms, resulting in a high degree of gamesmanship and gridlock.

Pundits disagree as to the level of influence some of those qualities, such as a growing national debt, actually have in economic output. But perhaps more important than the actual impact is the perceived impact. With several factors mounting in congruence, it becomes much easier to see the path to regression.

A New Perspective

Eswaran argues that the decline of the one remaining superpower, in conjunction with the potentially outdated and inaccurate characterization of emerging economies, should facilitate a rethinking of sorts of how economic groups are categorized.

Gone, he says, should be the "elite" groupings, such as the G7. In their place, he sees regional categorization that relies on geographic proximation.

"With the landscape of economic superpowers undergoing rapid evolution, it's high time we move away from the idea of exclusive groupings and instead focus on building a more inclusive global economy," Eswaran opined. "A shift to regional groupings similar to the ASEAN (Association of Southeast Asian Nations) that bolster each other on the economic and technological innovation front may be beneficial, as a regional approach allows for fairer economic comparisons."

Eswaran also argued that traditional methods for measuring the "success" of any nation, such as its overall economic output (GDP) and military strength, are outdated and fail to capture the actual conditions those living within a country are experiencing.

"While traditional measures of economic power like GDP and military spending may still hold some value, these are no longer an adequate benchmark for progress; a better reference could be more inclusive measures like literacy rates, life expectancy, and access to healthcare," he said.

While there will always be leaders and followers, often those roles aren't defined by the countries that end up playing them, but rather by the countries that hold the most power. As that power imbalance shrinks, as Eswaran believes it is now, his call for a more inclusive economic grouping structure holds more relevance.

How relevant will be determined not just by the paths of those emerging economies, but by the rate of decline of countries like the United States.