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The “centers of gravity” for global economic activity and extreme poverty are swapping hemispheres

Geogrande.com / Published April 10, 2020

ASIA AND AFRICA - Like two ships passing in the night, the “average” location of global economic activity has moved in recent years from the western hemisphere to the eastern hemisphere, while the average location of extreme poverty in the world is moving from the eastern hemisphere to the western hemisphere.

These average locations of economic activity and extreme poverty have been referred to as the centers of gravity for these two metrics. (See accompanying map.)  Extreme poverty is considered to be a person living on less than $1.90 per day.

Map - Center of gravity migration

Economists determine the locations of the centers of gravity using annual GDP and income data for numerous locations on the globe. Those data are used for calculating an average location of economic activity or extreme poverty for each year. For example, if the largest concentrations of economic activity were in only two cities, New York City and Beijing, then the “average” location (the center of gravity) would be halfway between the two cities—even if the location is in the middle of the ocean.

Plotting the migrating locations of a center of gravity on a map provides a useful tool for visualizing trends in the world’s economic landscape.

Since the early 1980s, the center of gravity of global economic activity has migrated eastward from a location in the mid-Atlantic ocean to a current location near China and India. This migration pathway results from China’s rapid growth as a world economic powerhouse and the growth of economies throughout East Asia.

A study published in October 2019 by McKinsey Global Institute says “In 2000, Asia accounted for just under one-third of global GDP, and it is on track to top 50 percent by 2040.” The study goes on to say that the region’s rise has not only lifted hundreds of millions out of extreme poverty; it has also raised living standards more broadly for every income level. Also, in recent decades, several Asian countries have propelled themselves into the ranks of middle-income and even advanced economies.

The southwestward relocation of the center of gravity for extreme poverty from Asia to Africa results from the rise in standard of living in China and India, with no similar improvement in Africa’s standard of living

Daniel Gerszon Mahler, an economics researcher with the World Bank, writes in an October 2018 online blog, “In general, the regions take turns in dominating the global income distribution. 80% of people living on about a dollar a day are in Sub-Saharan Africa, half of people living on $3.20 per day are in South Asia, nearly half of people living on $10 a day are in East Asia, and around three quarters of people living on $50 a day are in high-income economies.”