- I'm glad to see others interested in this like I am. Though, it is strange that you're using nominal GDP figures to compare the economic & industrial size of countries! Nominal GDP is market exchange rate based (FOREX), it doesn't say much about domestic production & industrial output. In this case, real GDP, which is based on purchasing power parity, is generally used instead. Take a house in the US that costs $250k, the same exact house in Turkey will cost $70k because of exchange rates (XR). Nominal GDP is also not reliable because currencies are often volatile. The UK lost a fifth of its nominal GDP over night after Brexit announcement, even though its economy was the same. The Russian rubble depreciated more than 5000 times against the USD during the period 1990-1997, that does not mean the Russian economy fell 5000 times... Nonetheless, nominal GDP is a good measure to emphasis:
1. Projection of power: the higher the XR, the easier it is to project power (if all else is equal).
2. Dependence on imports: the higher the XR, the lower is your foreign bill. Higher XR is important for countries which rely on foreign sources of energy.
3. Competitiveness in exports: the lower the XR, the more competitive your exports are, i.e. the cheaper your goods are in the global market. Lower XR is vital to economies relying on exports.
4. Default on foreign debt: the higher the XR, the easier it is to pay foreign debt. Higher XR is critical for countries with a lot of foreign debt.
5. FDI (foreign direct investment): the lower the XR, the more benefits one reaps. Lower XR + FDI is a recipe for great potential. For example, with a PPP exchange rate of 3x, the same amount of FDI will get you three bridges instead of one. That's a great deal.
- In general, maintaining higher XR is most beneficial for developed nations, because they heavily rely on foreign resources & imported cheap goods, & their economies are mainly driven my domestic consumption & less by exports, it also makes it easier for their companies to invest abroad. Contrastingly, developing nations prefer maintaining a lower XR, to become more competitive in the global market & to maximize benefit from FDI. The wealthier a nation, the more consumptive & thus less relying on exports, hence the higher its XR. In this respect, for a developed nation, significantly devaluing the currency is virtually suicide. & for a developing nation, deflating their currency to USD level would simple cripple growth. Having a high nominal GDP does not necessarily mean having the best position, the contrary is often the case, unless it's about projection of power. Developing nations, however, care less for projection of power & more for growth. China is notorious for managing ("manipulating") its currency to maintain global market share. Turkey is constantly inflating its currency to boost exports & hog market shares, which hit new records every single year. As long as this formula keeps working they will keep on it.
- Real GDP is the measure of domestic economic output based on purchasing power parity rates. For instance, domestically speaking, what just $1 gets you in Turkey, $3.7 gets you in the US. These currency rates are calculated based on purchasing power, rather than market exchange. To compare economic output, domestic consumption, inflation rates, income or GDP growth, we must use real GDP.
Not true, the Islamic World's nominal GDP currently stands at a grand total of $6.25 trillion dollars, spread over a population of 1.6 billion people. For comparison India, which has an approximately similar sized population to the Islamic world (1.3 billion), has an economy worth $2.45 trillion dollars.
- Despite the fact that the figures are outdated, nominal GDP is misleading, it doesn't say anything about the actual size of the economy of these countries. The USD & EUR being global reserve currencies radically skew exchange rates. In truth, as of 2020 (in 2010 constant USD adjusted for inflation) real GDP of the OIC stood at $22.4T, the US at $20.5T, the EU at $18.4T, China at $28T, & India at $11.5T, & Japan at $5.5T, spread over a population of 1.97B, & .33B, & .45B, & 1.44B, & 1.38B, & .13 -respectively; thus an average income of $11.4k, & $62.8k, & $41.0k, & $19.5k, & $8.2, & $43.7k -respectively; with a real industrial output (using 2019 figures) of $7.8T, & $4.1T, & $4.6T, & $10.9T, & $2.8T, & $1.7T -respectively, & a scientific (S&E) output (2019 scjmr figures) of 328k, & 503k, & 765k, & 641k, & 162k, & 122k documents -respectively.
Much of the Muslim world still lags behind countries such as Japan ($4.8 trillion dollars) and the United States ($18.6 trillion dollars)
- One, the OIC countries, aka Muslim world, are quite heterogenous, with vastly different levels of wealth & development. From some of the richest to some to the poorest in the world. Qatar boasted an average income of $121k in 2020, Turkey registered a $30.6k value, while in Niger it's less than $1.5k. Two, it's not about lag, it's about growth. Most countries in the Muslim world today are experiencing an 'economic boom', the type sustained by western countries post WWII, only more intense. It took the last 42 years for the EU economy to double in size & 33 years for the US, but only 17 years for the OIC. [it took just 13 years for China]
however, who have much smaller populations (127 million; 323 million respectively) but are highly industrialised,
- That's not true anymore for western countries, which are deindustrializing -with the exception of few. Between the period 2000-2020, France's industrial sector shrunk from $530B down to $490B, while Turkey's industrial sector grew from $250B up to $700B in the same period -under Erdogan. In fact, Turkey consumes 25% more energy in industry than France. Developed nations have been shifting their economies away from Industry into Services. Malaysia's industrial output per capita ($12.7k, 2019 figures) is actually higher than that of the US ($12.6), & the gap will only widen in the future. Turkey's ($8.4k) is higher than that in France or the UK ($8.1k).
as well place a particular emphasis on science.
- Scientific output in the OIC grew 13 times in the last 20 years (15 times for China), whereas it has stagnated in the West. There were more publications by the US in 2012 than there were in 2019. That, knowing that at least half the researchers in S&E in the US or in Europe are foreigners, mainly from China, India, Korea & the Muslim world. Particularly, about a fifth of PhDs in the US & Europe originate in Muslim countries. Since 2017, the number of PhDs choosing to stay in the US has been dropping. It's becoming increasingly less compelling for students to migrate for education when they can find it in their home country. Given this progress, it's only a matter of time that the OIC countries will surpass the US & the EU in scientific publications. From a perspective of provenance (counting only native research), that's almost already the case.
Additionally China's current economy is worth $11.8 trillion dollars (with a population of 1.41 billion.
- These figures are old. China is a special case, for its RMB has not yet been freely traded. The country holds more than $3T of USD in reserve currency & other assets, that's close to a third of circulated USD. If the RMB hits the market it will likely lead to a significant drop in USD value across the board. In that event, the nominal GDP of China will inevitably skyrocket to match real GDP ($28T), or rather the USD will depreciate. This, of course, is not beneficial to China, because they don't want their goods to rise in value & lose market share. Their economy still relies on exports, but they are moving fast towards a consumerist economy. When China feels comfortable about its consumption based economy, it will have no problem dropping the dollar.
Progress, however, is more rapid in some countries than others; for example Indonesia (population 261 million) became the first country in the Islamic world to surpass the trillion dollar mark in 2017
- In nominal terms, yes. In real terms, the GDP is $3.8T to surpass Germany & Russia to become 5th in the next couple of years, though it has already surpassed them in industrial output. Indonesia has also experienced one of the fastest burst of scientific publications in the world, increasing 70 times over the past 20 years. Within a decade, Indonesia will have a population roughly that of the US. Given the economic boom that has been taking over the country, Indonesia could very well become a US rival not too long in the future.
, with Turkey closely behind at almost achieving this target (which currently stands at $841.2 billion dollars).
- This is a good example why nominal GDP is deceptive. Turkey registered a $958B nominal GDP in 2013 & $720B in 2020 (in current USD), when in reality its economy expanded by 53% during that period. In real terms, Turkey's 2020 GDP stood at $2.62T, at rank 11, surpassing thus Italy ($2.26T) & Mexico ($2.48T) & closing in on France ($2.88T). If Turkey decides to raise interests, the Turkish Lira will naturally appreciate significantly. So far, that't not the policy they chose.
Malaysia too is a laudable case, which is set to reach a nominal GDP of $500 billion dollars by 2022, with a population of only 34.2 million people.
- In real terms, Malaysia's GDP (in 2010 constant USD adjusted for inflation) is $1.09T, not too far from Australia's $1.29T. Malaysia started its economic boom in the 90s from a poor agricultural nation, & it's still growing. Indeed impressive.
Significantly, these more advanced Muslim economies are not solely oil-based economies (with the exception of Saudi Arabia; $678 billion dollars and with a population of 32.4 million), but have rapidly been expanding in economic complexity over the years.
Perhaps far more exciting is that the macroeconomic trends show the Islamic world will accrue a total nominal GDP wealth of $8.85 trillion dollars by 2022 (representing an average growth rate of 7% to 2022).
- Given the current trend, the Muslim world should surpass the Western world in terms of economic & scientific output by 2040.