The world has changed a lot over the past 20 years. What does that change look like from the perspective of wealth creation?
Before looking at the animated GIFs below showing how wealth has changed by country over the past 20 years, take a minute and guess.
Would you guess the United States is #1? Where is the second-most wealth located? What about Chinese businessmen, how have they done? Are individuals and businesses located in European countries still wealthy?
Here’s the data.
(As a note, the first bar graph is animated across time from 1980 to 2011; the second graph takes a little longer time to play.)
Not surprisingly, individuals and businesses living within the boundaries of the United States are the wealthiest. In addition to being the wealthiest, the Americans are #1 in absolute wealth growth since 1980.
Interestingly, the Germans, French, or English are not in second place. Second place belongs to individuals and businesses headquartered in China, trailing the United States by about $67 trillion in 2011.
Rise in Chinese wealth
How remarkable is the rise in Chinese wealth?
Well, in 1990 the Chinese were far from a leader, with an estimated wealth of only $3 trillion.
Over the 21 years since 1990, individuals and businesses located in China accumulated about $60 trillion, putting China about $13 trillion above third place Japan at about $50 trillion.
The data also confirm what economists have known for some time – the slow, relative decline of European countries and the rapid rise in some so-called developing countries, such as Brazil ($21 trillion) and Mexico ($10 trillion).
Another interesting observation is the lack of an African country among the world’s wealthiest. Far down the list is South Africa at about $3.5 trillion, equivalent to the amount of wealth the Chinese had in 1980.
With these historical wealth estimates as the background, when would you guess individuals in China will be wealthier than Americans?
The simple answer: at the current rate, around 30 years, maybe a little sooner if the United States stays on the same path she’s currently on.
Overall, individuals in the United States continue be the wealthiest in the world in absolute wealth terms. Perhaps concerning, the differential between the United States and China continues to narrow, with the most likely outcome that kids born today will almost certainly see the United States cease to be the world’s wealthiest. That is, unless the growth rate in wealth creation picks up in the United States or the rate of wealth creation slows down in China.