In the past few decades the rise of countries like South Korea and Greece to First World status and immigration from the Third World to the First has largely balanced the higher birth rate of the First World. But with the very rapid economic growth rate of China, India, and much of the rest of the Third World we will see the Third World shrink and the First World grow over the course of this century.

We can reasonably hope that most of the world's people will live in counties with economies rich enough to support extremely stable democratic governments long before the end of the Twenty First Century.

Many people may regard this is far too optimistic, so before I show why it is reasonable let me quickly point out a couple of reasons why it is at least plausible.

Current Success of the Third World

China’s growth is based on labor intensive industrial exports, and is similar to the rapid growth of Japan, South Korea, Taiwan, Hong Kong, and Singapore. So China is following a proven formula that has rapidly transformed several Third World nations into First World nations. On the down side, a country of 1.3 billion may not be able to follow this path to First World status as rapidly as the others because it will flood world markets for the goods it exports.

India is about one fifth of the Third World and through Internet outsourcing it has recently achieved super growth, growing fast enought to double per person output in a decade. Between China and India 45 percent of the Third World will have reached super growth. What was once the miracle of Japan and then a few other Far Eastern Tigers like Korea, and Hong Kong will be the norm for almost half of the Third World.

Much of the rest of the Third World has also been growing rapidly recently. The Economist magazine has a table every week on the economic growth of twenty Third World countries and five high income economies. In late 2005 when this article was orginally written, all twenty of the Third World countries had economic growth that exceeded their population growth. All but one had a per capita economic growth rate that exceeded the normal First World per capita economic growth rate of two percent. The exception, Mexico, had a growth rate roughly equal to the typical economic growth of the most highly developed First World nations . The story the statistics told is that in the previous year the majority of the Third World’s population lives in countries at or near super growth, seven percent or more per capita growth per year, and much of the rest of the Third World is not only growing faster than its population, its per person economic growth is faster than the First World.

The current growth of the Third World is very impressive, perhaps the best ever. It seems likely that it will fall from this peak. The Third World’s growth was very impressive before the East Asian financial crisis of 1997, probably the best ever up to that time. Unfortunately, the rapid growth declined in several countries. So just as the Third World fell back from that peak in the 90's, I expect it to fall from the current one, but I also expect it to eventually rise to future peaks of even faster growth.

Low Income Category Rapidly Declining

Furthermore, it is likely to continue its rapid decline after that. Pakistan is likely to make it into the low income category a year or two after India. If that had happened in 2005, a little more than 17 percent of the world's population would be in low income countries. Given present growth rates three of the five most populous low income countries, India, Pakistan, and Vietnam are likely to be lower middle income countries in less than ten years. The low income category is rapidly being emptied.

Granted, to transform all the Third World nations into First World nations we will have to empty the middle income category and emptying the middle income categories is much more difficult than emptying the low income category. The border between low income and middle income was 826 in 2004. The border between middle income and high income was 10,066. Still the rapid decline in the population of the low income category can at least lend some plausibility to my assertion that the nations of the Third World can be absorbed into the First World over the course of this century.

How the Third World Will Join the First World

The rapid growth of India based on Internet outsourcing suggests there maybe a second route. So while a large portion of the Third World can grow to First World status through light industry, another large portion can take this second route, the Internet, without hindering the first group.

Quite the contrary, if the countries that are growing through outsourcing buy the light industrial goods of the light industrial exporters then the new group, the outsourcers, will actually help the old group, the industrial exporters to grow.

Finally, the success of these two routes is pushing up natural resource prices which might provide a third route.

Several routes to success means that Third World nations may not have to wait their turn, or at least wait as long, to get on a path to rapid development.

Furthermore, there is a race between the higher birth rate of the Third World and the ascension of Third World countries to First World status through economic growth. The opening of new routes to the First World, particularly through the Internet, may dramatically shift the advantage to economic growth.

Light Industry

Other centers of light industry in Asia are already experiencing rapid growth. Vietnam seems to be approaching super growth, while Indonesia, Pakistan, and Bangladesh appear to be accelerating. Light industry has over and over again been the secret to very rapid growth so we may reasonably hope that poor Asian nations that already have labor intensive industries will be enjoying super growth in another decade.

As wages rise in labor intensive Asian industries the capitalists will eventually have to search elsewhere for cheap labor, and that means Africa. Currently or at least recently, Niger needs or needed our help to avoid starvation. This may not be the last time that the desperate cry goes out of Africa for help, but the end of that desperation is coming. We do not need to teach Africa "how to fish." We need to tide sub-Sahara Africa over until it is Africa's turn to first build the labor intensive industries that have kept incomes from falling in Bangladesh, Pakistan, and Indonesia and then rapidly expand those industries until they achieve the super growth as China and the other far Eastern tigers have.

An October 3rd article in the New York Times, "Africa and Optimism" by Nicholas Pikristof makes several of the points I made in this essay. Wages in China are going up and while industry may not be flooding into Africa just yet Pikristof seems to think it will.

When Africa becomes the new center for low wage labor intensive industry its growth may even exceed China's experience. When the capitalists tell the workers that they will need to accept lower wages or they will move to a poorer county, the African workers will be able to say, sorry, you are at the end of the line, Jack. From here on the wages of the women who make underwear will go up, not down. Rapidly increasing productivity will be coupled to rising wages to produce even faster growth.

Today most people live in Third World nations and relatively few live in the First World. So there are many workers to produce the t-shirts and relatively few to wear them. The explosive growth of China, and the future many other parts of Asia may change that. As this happens the differential between Third World and First World wages will probably shrink.

It has been argued that the people or conditions of many Third World nations are not right for industry. My argument is that the world economy is competitive. Today those nations can not compete with China and other producers, but as China and the other nations currently growing through labor intensive industry become rich their wages will rise and there will be incentives to overcome the many difficulties of running factories in Africa.

The Internet

What is more other countries besides India will also be able to use the Internet to grow. Discussing the cheap labor in India one article said that a computer expert that might get 120 thousand dollars a year in wages in benefits in the US might go for 40 thousand dollars a year in India. Now, imagine what 40 thousand dollars means in Ethiopia where the per capita GDP is about a hundred dollars a year. Forty thousand dollars is roughly 400 times the per capita GDP of Ethiopia. (Note, the last two sentences are already a bit dated, Ethiopia's per capita GDP is now 160 dollars. It went up about fifty percent in one year.)

Each country will probably be able to set up at least one place where its talented citizens can be employed on the Internet. If Ethiopia can produce one such computer expert out of a thousand people then it will be a powerful stimulus on its economy, bringing in much needed foreign exchange, that will buy First World capital equipment, which will allow Ethiopia to grow rapidly.

Rising Natural Resource Prices

Of course these higher prices will have to be paid by rising Third World countries like China and India, but most of the oil, soy beans, and other natural resources will be sold to the First World, so the rising prices will enrich the Third World at the expense of the First World. As the high income countries, roughly the First World, are more than twenty times as rich as the middle and low income countries, roughly the Third World, the redistribution of income is a good thing.

Of course the First World will react, Europe and Japan, where gas has been much more heavily taxed than it is in the USA, have much smaller cars and fewer SUVs. We can expect Americans to do the same, and prices may come down as they have in the past. But to achieve that First World will have to conserve enough to more than balance the rapidly growing Third World demand.

Nevertheless, the present rising natural resource prices are an early indicator of the future. As more countries become First World nations the price of First World products will fall relative to the cost of Third World products, which will lift still more Third World countries into the First World.

The End of the Third World

This is perhaps a pessimistic view of the future. Just as the low wage, labor intensive industries became one engine of rapid development several decades ago, and Internet outsourcing has recently become another engine, new engines of growth may develop. But even with the engines we have now the Third World's days are numbered.

Sure, This Maybe Too Optimistic

China's growth is perhaps the more secure of the two. China is following the well worn path of Japan, South Korea, Taiwan, Hong Kong, and Singapore. The big question is can a country with 1.3 billion people, roughly ten times that of Japan, and more than twenty times any of the others follow the same path to a First World economy. The danger facing China is that it will drive up the price of what it is buying, and drive down the price of what it is selling. Of course China is already doing this on massive scale, but so far they are still growing rapidly.

Furthermore, China's trading partners frequently complain about its influence on the market, as it grows that influence will also grow, which may eventually transform the complaints into action, protectionist laws.

In 2005 China had a per capita output of about 1,740 dollars per person in trade weighted exchange rates according to the World Bank. For China to become a high income country they would need an income of 10,725 a year in 2005. If we multiply 10,000 by 1.3 million we would get 13 billion dollar total economy, which is about the same as the American economy. Could the world deal with an economy the size of America's that grows at nine percent a year? As it will take a few decades to reach that level, the question would be, will the world be able to deal with China's economy growing that fast if and when it happens.

Nevertheless, as China is now growing at about two percent above super growth level it seems likely that it may well double its per capita out put in the next decade, even if it slows a bit. From there it would not take an excessively long time for China to reach high income status even if its growth slows to say five percent a year. Therefore it seems likely that China will have a First World economy capable of very safely supporting a stable democracy within three decades. I hope that it will make the transition to democracy by then.

India and the Internet?

On the up side, past experience suggests that seven percent growth, roughly doubling economic out put every decade is close to the limit of growth based on light industrial exports. China seems to be doing a little better than that, perhaps even more rapid growth is now possible. But with India all we know is that their growth seems to be accelerating. It has been said that at least some parts of India's Internet business, I think it was software, are doubling once every two years. Clearly the overall growth of the Indian economy will not be as fast as the most rapidly growing export. But there is a fair amount of room between super growth, doubling once every ten years, and doubling once every two years. So perhaps India can set new higher standards for rapid growth.

On the down side, growth of Internet outsourcing could slow, making India much richer but still well short of high income status. The revenues from outsourcing could, like oil and other natural resources, raise wages which would prevent India from developing light industrial exports the way China and the other far eastern countries have. So India could get stuck some place in the middle income category like oil and natural resource rich states. It is close enough to middle income now to guarantee that it will not be stuck in the low income category.

On the other hand, the Internet outsourcing is different from natural resources. Increasing population can increase the supply of intelligent people to work on the Internet, while increasing population does not increase the amount of oil in the ground, and non-renewable natural resource decrease as they are used. So the amount of oil a country has in the ground per person can only go down as population increases, but with rising education the supply of highly qualified people working on the Internet is likely to be an increasing portion of the population. The oil rich country is trying to run up an escalator that is going down, with the Internet India is at least running on flat ground.

Furthermore, the demand for outsourcing is likely to grow fairly rapidly. In fields like computers a rapid rate of growth can be maintained simply by holding a steady percentage of a rapidly growing world market.

Internet outsourcing might not sustain super growth for India all the way to ten thousand dollars per capita output per year, the standard set by the World Bank for high income status, but it might still support growth at, for example, five percent a year which would support doubling once every fourteen years. This would allow India to rise to First World status in about 50 years.

In Conclusion

There will need to be considerable adjustment in the First World. The increased prices for oil which are a result of increased demand from China, India, and the Third World, illustrate the basic point that we will have to share access to the world's resources. The First World will have to meet the challenge of reinventing the technology of a rich society so that we can provide a comfortable life style with fewer resources and less harm to the environment.

Furthermore, many First World industries will move to the Third World. Industrial production of consumer goods will be concentrated in the Third World. The First World will pay for them with capital goods which will enable the Third World to rapidly increase its productivity and achieve First World status. In the process many First World workers will loose their jobs. The pain of readjustment in the First World will be real, but relatively minor compared to terrible suffering the Third World currently experiences.

Will First World countries become Third World countries? The history of many decades suggests this is very unlikely. The richer First World countries with broad based industrial economies tend to grow at about two percent a year. There are recessions where income per person declines a percentage point or two. Growth can slow for a decade as it has in Japan, or even stall altogether for about a decade as it did in Finland and Sweden. But as most broad based industrial economies are several times as rich as the richest Third World country and really serious economic decline, which is common in Third World natural resource exporters, is unknown in broad based rich industrial countries there is little reason to fear First World nations becoming Third World Nations. Of course oil rich nations and even a natural resource producer like Argentina move up and down between high and middle income depending on the prices of their exports. But the broad based industrial nations are unlikely to suffer any serious decline. Once a First World nation always a First World nation.

I have just written a new web page with a list of First World Nations, countries which have high incomes according to the World Bank and Free according to Freedom House. I also examine issues of political and economic stability and peace.

Economics Qualifications

This concludes the economics section of this web page. Warning religious discussion ahead. Actually none of it should disturb people who are not religious much, it just might not interest you.

Religious Implications

Religion in the First World

If the above analysis is true, the First World population will be a rapidly increasing portion of the total world population. This is wonderful. Economic misery will decrease and First World democracies never fight wars against each other so the world will probably be at peace.

But it will also be a challenge for the world religions. Religions will have to ask how can we thrive under First World conditions, as they will not be able to rely on the Third World masses for growth in numbers for ever.

Already the Catholic Church, even though it is often dominated by Europeans, is asking how America maintains such a vibrant faith.

I suspect that the strength of religious media, those reviled televangelists, may have something to do with it. According to some calculations I have done people are spending several times as much time consuming religious media in the United States as they are in church. As statistics from the statistical abstract have long shown that Americans spend the majority of their waking hours consuming media. Media consumption officially has passed sleep to become the number one activity. So religious media influence by meeting people where they live.

Implications for Charity

I have my own version of the old saying about charity and fish. Give a man fish, and he eats for a day. Teach him to fish, and the river will be over fished, the fishery will collapse, and all the fishermen will starve.

The problem in recent decades has been that the First World has only so many backs that need to be covered with t-shirts and the Third World has had too many hands to make those t-shirts. If we taught them to be more efficient it might simply make things worse as the extra supply drives down the prices of t-shirts and the wages of the workers who make them. On the other hand, if people simply take advantage of our charity to sit around and contemplate their navels at least they will not be driving down the wages of the other Third World workers.

Only so many people could use light industry to become rich at any one time, so the problem was not to change the behavior of the Third World, but to open First World markets so more Third World nations could develop. We seem to hav made a lot of progress on that score and now the Third World is developing. Still if bad Third World government policies, or backward traditions prevent the people of a few Third World nations from grabbing opportunities those opportunities will probably be grabbed by others and little will be lost in the over all growth of the Third World.

All of this suggests that we can safely follow the advice of Jesus and simply feed the hungry and cloth the naked.

Finally, I might note that the difference in income between the Third World and the First has been used as an opportunity to spread the faith. Christians have helped the poor in the Third World economically in hopes that they would win converts. As the Third World grows economically it may become hard to buy souls with rice. It will also be difficult to attract attention to the message with rice. So if religious people want to spread their message through charity they should act soon.

Pages on Religious Membership Statistics

A summary of world relgious statistics

A summary of membership statistics for Christian groups

Pages on the future growth of Christianity, Islam, and atheism

Links to religious statistics

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