History provides many examples of large changes in the relative economic size of nations. This column examines the impact of rapid economic growth in emerging economies on the income and welfare of other nations and the mechanisms through which these effects occur. The authors find that rapid growth in Chinese productivity from 1960 to 2020, and in Japanese productivity in the early decades of the sample period, contributed to a decline in the US share of global GDP, but raised US welfare through reductions in consumer prices and the cost of living. The findings highlight that changes in relative incomes can be misleading for changes in welfare.

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4 January 2026

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VoxEU

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https://cepr.org/voxeu/columns/accommodating-emerging-giants-global-economy

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