This still means that China is projected to be the second or the biggest economy in the world by 2050 (depending on whether GDP is compared at market exchange rates - in which case the US will still be slightly ahead - or in Purchasing Power Parity terms, which takes into account local buying power). India stands to be third or second equal with the US in PPP terms.
Elsewhere, the Brazilian economy will be as big as or bigger than that of Japan by 2050 (but still only a quarter the size of the US), while Indonesia and Mexico will also grow rapidly to overtake Germany and the UK. Overall, the world's largest emerging economies - the E7 of China, India, Brazil, Russia, Indonesia, Mexico and Turkey - will grow from just a fifth of the size of the G7 economies in US dollar terms to 25% larger by 2050, and 75% larger in PPP terms.
However, the report argues that this shift in economic power to emerging economies should be seen by the developed world as an opportunity to boost trade rather than an economic death-knell. This larger global market should allow companies in the developed economies to specialise in areas of comparative advantage, rather than trade becoming a zero-sum competitive game. Similarly, consumers in OECD countries should also benefit from low-cost imports from other emerging economies.
Even so, while the overall effect of the rise of the E7 should be beneficial to OECD countries, there will also be plenty of corporate and individual losers. Mass-market manufacturers in mature economies will continue to suffer, with hi-tech firms also coming under increasing pressure.
Financial services firms that are not able to penetrate E7 markets may also become vulnerable in their home territories. Income inequalities may increase within OECD economies as 'global star performers' do well, but low and medium skilled workers are squeezed by lower cost emerging economy labour in tradeable sectors and migrant workers in non-tradeable service sectors.
Professionals below this global star level may also struggle to maintain their premium income levels in the face of competition from lower cost graduate labour at the end of internet connections in emerging economies.
The report notes that these losers may well be highly politically vocal in their opposition to globalisation. Suggested public policy responses include raising general education and skill levels to boost long-term growth, and active retraining and relocation policies for workers displaced by low-cost competition.
The world in 2050: how big will the emerging market economies get and
how can the OECD compete?
PricewaterhouseCoopers, March 2006
Review by Steve Lodge.