“The times … they are a changing …” What? No, not again! Well, actually, it’s really just a continuation of the same on-going process that began who knows when. But it is important to keep tabs on what has been happening and what it means to us.

So, where is the forum to comment on the possibility of a Hollywood action-movie super-star Arnold Schwarzenegger becoming the Governor of California - reportedly the world’s fifth largest economy? Probably, not here … but it is an excuse to ask what are the largest economies in the world.  And to ask have New Zealand’s interests changed given the mega-stars of the world scene?

That leads to a question: name the big-5 in today’s globalised economy? Difficult, of course because there are lots of definition issues (use GDP or GNI? adjust by what PPP exchange rates? what constitutes ‘one’ economy? etc). So, apologies if I resort to using very round approximate numbers. But my general message holds and, I would argue, is robust to changes in definitions.

Taking the 15 countries of the EU together, suggests two economic entities on either side of the North Atlantic of similar magnitude. Moreover, this has been the case since 1975. Although the relative positions of the two have swapped - the US was in 1975 about 10 percent smaller than the EU and is now about 10% bigger than the EU. Yes the issues with definition etc make the magnitudes somewhat imprecise. However, the relatively better performance of the US over this period is unarguable - as is the conclusion that the big-2 remain on either side of the North Atlantic.

In another hemisphere is Japan. In the mid-1970s this was about one-third the size of each of the US and EU. Furthermore, it looked to be gradually ‘catching-up’ to the big guns, as its own rapid growth during the 1980s was magnified by the poor US and EU performances over that decade. By 1990 Japan was more than 40 percent of the size of each of the big-2. But the 1990s has seen Japan labour under the weight of financial sector stress and dislocation and is now back to again being not much bigger than one-third the size of the US.

That’s three out of the big-5. Who are the other two? The rapid rise of two new kids on the block may be well-known to many, but may well be a surprise to others. In 1975 both China and India were of roughly equal size at about one-seventh of the US. Over the following quarter-century China expanded by just under 8-fold, to leap past Japan and be just over one-half the size of the US at the turn of the millennium. Over this same period India more than tripled in size to be approximately one-quarter the size of the US by the year 2000.

Looking ahead, the potential for the two new kids to well and truly gatecrash the established order over the coming decade is clear. Projecting out to 2025 a continuation of the faster growth of the ‘new’ economies (at around, say, 4 to 5 percent per annum) compared to the moderate growth of the established (say around 2 to 2.5 percent per annum), sees China takeover as the head of the gang-of-5 and India nudge out Japan into fourth spot about ten years from now. The end of this quarter-century sees China of the order of 15 percent bigger than the US and India close to half the size of the US. Surprisingly, the relative sizes in 2025 of the ‘established three’ remains similar to that fifty-years earlier in 1975. That is, two big guns on either side of the North Atlantic, with Japan about a third the size of the US.

Projected size of world’s largest economies - the BIG-5

In other words, the world that ‘we’ knew in 1975 (US, Europe and Japan), might not have changed that much. The more pronounced changes have occurred (and are likely to continue to occur) elsewhere. This puts a different perspective on the ‘changing’ world.

So what of New Zealand’s adjustment to this new world order? Cynics assert New Zealand is slow to absorb changes. Some even suggest that we still haven’t adjusted to the early-1970s upheaval of losing unfettered access to our largest export market. But I would argue that’s not true. The UK is now well and truly off the radar screen in terms of trading partners. From being our largest export buyer and import supplier, the UK struggles to make it into the top four of either ranking.

Our top trading partners are now Australia, US, Japan and China. But if we add up the EU countries together (as above), they leap to number two spot. A similar ranking occurs if we expand the numbers to incorporate tourism receipts. So the relationship with the ‘established three’ remains secure and relatively stable. But the surge of China has not been lost on New Zealand with it climbing rapidly up our trade ladder. So, yes, we can and do adjust.

In this context though, India appears invisible on New Zealand’s radar screen. However, the potential is there. Recent New Zealand involvement in the reconstruction of the Bhuj Hospital and growing excitement surrounding Bollywood film industry’s interest in New Zealand are both sowing the seeds for an expanding relationship. But the question niggles - are we running too slow to catch this change?

The suspicions remain that New Zealand still very much looks to the European-American hemisphere for its place in the world - and in the global economy. Our news supply is predominantly sourced from either side of the North Atlantic. We still refer to the ‘Middle East’ - curious when it’s actually to the west of us. Even more curious is the odd reference to the ‘Far East’ (which is, of course, a lot closer to us than the ‘Middle East’)

A piece of useless information - when in India a few years ago I was totally confused when news reports kept referring to something called the ‘West Asia peace talks’. But thinking about it, that’s a far more informative description - from New Zealand’s perspective. Another piece of useless information - ever tried to fly to Mumbai (India’s commercial heart)? You can’t now without having to stop overnight somewhere.  Compare that to the choices available when flying to anywhere in the Atlantic hemisphere.

We have, arguably, a lot more in common with India than any of the other big-5. For example, they have English as a national language, have inherited many British traditions, have a plethora of small businesses and have mastered the task of form-filling down to a fine art.

Arnold Schwarzenegger probably never said it, but do we need to take a cue from his predecessors? From the Hollywood of days gone by … “go west” … is this where the future lies?

A last thought … sitting on the sidelines is Russia. At the turn of the millennium this was about one-eighth the size of the US. If - yes it is a big if - but if it shakes-off its sleepiness, it could well be close to one-fifth the size of the US by 2025. But … they don’t play cricket.