By 2030, half the global stock of capital, totaling $158 trillion (in 2010 dollars), will reside in the developing world, which is less than one-third of today’s capital. Countries in East Asia and Latin America account for the largest shares of this stock, says the latest edition of the World Bank’s Global Development Horizons (GDH) report, which explores patterns of investment, saving and capital flows as they are likely to evolve.

Developing countries’ share in global investment is projected to triple to three-fifths from one-fifth in 2000, says the report, titled “Capital for the Future: Saving and Investment in an Interdependent World.” With world population set to rise from 7 billion in 2010 to 8.5 billion 2030 and rapid aging in the advanced countries, demographic changes will profoundly influence these shifts.

Productivity catch-up, increasing integration into global markets, sound macroeconomic policies, and improved education and health are helping to speed growth and create massive investment opportunities, which in turn are spurring a shift in global economic weight to developing countries. A further boost is being provided by the youth bulge, particularly in the relatively younger regions of Sub-Saharan Africa and South Asia.

The good news is, unlike in the past developing countries will likely have the resources needed to finance massive future investments for infrastructure and services, including education and health care. Strong saving rates in developing countries are expected to peak at 34% of national income in 2014 and will average 32% annually until 2030. In aggregate terms, the developing world will account for 62 to 64% of global savings of $25 to 27 trillion by 2030, up from 45% in 2010.

Saving will continue to be dominated by Asia and the Middle East. One projection from the report claims that in 2030, China will save far more than any other developing country – $9 trillion in 2010 dollars – with India a distant second with $1.7 trillion, surpassing the levels of Japan and the United States in the 2020s.

As a result, China will account for 30% of global investment in 2030, with Brazil, India and Russia together accounting for another 13%. In terms of volumes, investment in the developing world will reach $15 trillion (in 2010 dollars), versus $10 trillion in high-income economies. China and India will account for almost half of all global manufacturing investment.

Maurizio Bussolo, lead economist and lead author of the report, notes that although wealth will be more evenly distributed across countries, it does not mean everyone within the countries will benefit.

The report finds that the least educated groups in a country have low or no saving, suggesting an inability to improve their earning capacity and, for the poorest, to escape a poverty trap. “Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor,” concluded Bussolo.

– Maria Caluag
Sources:, World Bank
Photo: Hope for China

Sustainably Grown Palm Oil: The Future of Fast Food?
What’s better than deep-fried dough covered in sugar? Turns out, Dunkin Donuts has an answer: sugarcoated, deep-fried dough that doesn’t destroy the rain forest.

Palm oil has become a key ingredient in many processed food products, including fast food and as many as 50 percent of foods sold in grocery stores. Palm oil has surged in popularity over the last few years not because of its taste or nutritional value, but because of the consumer backlash against trans fats, which are known to contribute to the development of a number of diseases. Because palm oil is solid at room temperature, food manufacturers use it in products like Oreos that require a soft yet thick texture.

The replacement of traditional solid fat sources with palm oil has had unintended consequences. Palm oil is made from the pulp of the fruit of oil palm trees, which grow mainly in Africa, Southeast Asia, and Brazil. The top two palm oil-producing countries are Indonesia and Malaysia, where thousands of acres of rain forest have been cut down and replaced with oil palm plantations.

While the production and exportation of palm oil has supported the economies of these countries, the extensive deforestation and habitat destruction associated with its production will have only negative long-term consequences. Greenhouse gas emissions have increased dramatically in Indonesia due to the carbon released as a byproduct of deforestation. One unique population of orangutans that lives only in Aceh, Indonesia is nearing extinction due to fires raging through the expanses of palm oil plantations next to its rain forest habitat.

Local communities of people who depend on forest resources for their livelihoods have fought to end the destruction, but little has been done on a global scale to stop it.

That is, until now. Dunkin Donuts has announced its intention to use only sustainably grown palm oil in making its donuts. While it remains to be seen exactly what changes the popular food chain will make in order to source sustainably grown palm oil, the decision is certainly a step in the right direction.

As long as the global market has access to unsustainably produced palm oil, food corporations will continue to purchase it and use it in products, contributing further to environmental destruction. Consumers must stand up to protect the rainforest and those who depend on it by purchasing only those products made with sustainably grown palm oil.

– Kat Henrichs

Sources: NPR, Rainforest Action Network
Photo: Wikipedia