Seldon Matrix

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mayo 7, 2014 economía

These 12 languages are worth over 90% of the GDP of the entire Planet Earth!!

About a month ago, The Economist published a book review about the value of Foreign Language learning. It indicated that people in the United States learning languages like German or French could increase their earning potential over their lifetimes by as much as 50%. This is an impressive number, and certainly underscores the importance of learning foreign languages in the modern world. The famed former CEO of General Electric, Jack Welch, once said that the CEO of the future “could not be like me. I spent my entire career in the United States. The next head of General Electric will be somebody who spent time in Bombay, in Hong Kong, in Buenos Aires”. Right there, that’s 4 languages that the CEO of the future needs to speak. We are living in a globalized economy, and we need to appreciate the importance of Global Trade, and the role that foreign languages play in it.

Yet, when it comes to deciding which language is best to choose, should we follow The Economist’s advice and learn German or French? Or do we look at the trends of GDP growth set by the BRIC nations and learn Chinese, or Portuguese, or Russian? One way to do it is figure out which language is spoken by the most amount of people and learn that (Chinese), or the one that is spoken in most countries (English)… I think we can take another approach. How about adding up the GDP of the countries that speak a particular language, and determine which language is the most economically active, and learn that instead?

So, I gathered data from the IMF’s GDP projections for 2014 (and the data that was unavailable, I estimated from the most recent data) and compiled a list of languages by GDP; that is, I grouped the GDP of countries that spoke mainly the same language, and compared the economic power of each language against each other.

Some countries speak more than one language, and this presented a problem when making the comparison. In countries with low GINI, I simply divided the nation’s GDP by the population of language speakers to assign the appropriate amount of GDP to each language. In nations where this data was not available, I took the most common official language for international trade and law (some countries had more than one and most of these included English, I tried to disqualify English as much as possible, but still considered factors such as domestic popularity in law and trade, as well as the country’s dependency on international trade, giving first priority to the local language).

Here is a link to a Google Spreadsheet with the data.

Note: GDP measures a country’s productivity, which means the amount of goods and services a particular country produces. It does not measure wealth or well being. As such, GDP is a great measure for international trade and a good barometer to choose a foreign language. I chose nominal GDP because, while PPP is an indicator of relative purchasing power considering internal trade, nominal is better suited to compare the absolute claims on international resources, and thus ideally suited for international trade comparisons.
Here are the languages with the largest share of GDP:

#1.- English

Worth $25 Trillion, and 32.43% of the World’s economy

Spoken in: The United States, the United Kingdom, India, Australia, Canada, and over 45 more countries around the world.

English is, by far, the language which captures the largest percentage of the world’s productivity. It is no wonder this is the world’s lingua franca, and the standard for international commerce and law. Not only is English spoken in the world’s largest economy, the United States, which is bigger than the next two largest economies combined. English is also the main language of 3 members of the G7 (the UK, Canada and the US), but it’s also the most spoken official language of one of the world’s fastest growing economies, India. It is also spoken in many other developed, if small, economies, such as Australia, New Zealand, and Ireland. In all, English is the main official language for international trade in over 50 countries, making it one of the most spoken languages around the world. It is also a very important secondary language in most other countries around the world.

It is hard to go wrong by learning English. If you don’t already speak English, learning it is a must. It is hard to compete in today’s globalized economy if you don’t speak other foreign languages, but it is definitely impossible without English.

#2.- Chinese

Worth $11 Trillion, and 14.39% of the World’s economy

Spoken in: China, Taiwan, Hong Kong, and Singapore.

The growth of the Chinese economy is publicized everywhere. Not only is China the second largest economy, but it is also the fastest growing. It is set to overtake the United States as the world’s largest economy before the end of the decade. Because of its impressive growth and productivity, China has earned the nickname for some time now as “the World’s factory”. China is very important to the world’s productivity, and logistics. Added to that, China is rich in natural resources that make it ideal for growth. But Chinese is not just about the People’s Republic of China. Chinese is spoken as an official language of foreign trade, or as a secondary language, in many neighbouring countries which are also experiencing growth. Not to mention that important financial and innovation hubs, such as Hong Kong, Singapur, and Taiwan also speak mainly Chinese. It is this internationality as well as China’s economic might that make Chinese an important language to learn in this era of Foreign Trade.

#3.- Spanish

Worth $6.8 Trillion, and 8.74% of the World’s economy

Spoken in: The United States, Spain, Mexico, and over a dozen other countries in Central and South America.

Spanish has been an international language since the time the Christopher Colombus reached the Americas. After all, it was Spanish explorers such as Magellan who first circumnavigated the planet. Spanish’s importance in the modern economy is seen in the ethymology of the names of some of the most powerful global currencies, such as the US dollar or the Japanese Yen, named after the nickname that locals gave to the Mexican-made Spanish currency of the Colonnial Era. It is because of the old glory of the Spanish empire that the Spanish language continues to be one of the most spoken around the world, being the only one, for instance, that is spoken by more than one FIFA World Cup Champion. Three Champions, in fact, speak Spanish: Uruguay, Argentina and Spain. Spanish is very popular as a second language around the world, and is also limitedly spoken as a first language (though not officially recognized) in many other countries, most notably, the Philippines.

And yet, today, Spanish is a language that is usually associated with poor Latin American countries such as Honduras, or Bolivia, or with financial meltdowns such as the ones in Argentina or Venezuela. But the economic growth and relative prosperity of nations such as Spain and Mexico make this a very important language for international trade. Mexico, for example, is the world’s leader in International Trade Pacts, and an important logistics hub for the US and the world’s trade network, not to mention, one of the largest producer of automobile parts and assembly in the world. And despite Spain’s recent troubles with unemployment, it still is home to some of the world’s largest banks and international corporations. Panama, another Spanish-speaking country, controls the Panama Canal, an important hub for world trade.

But perhaps the most overlooked factor of importance for Spanish as key to globalization is the fact that 20% of the population in the United States speak Spanish natively. The US Spanish-speaking community is the world’s largest Spanish speaking economy, surpassing even the economies of Spain and Mexico, and it is a growing market. Learning spanish for international trade as well as for catering domestically to the fastests growing market in the world’s largest economy could prove useful.

#4.- German

Worth $5 Trillion, and 6.47% of the World’s economy

Spoken in: Germany, Austria, Switzerland, and Belgium.

German is spoken in some of Europe’s most important trade hubs, such as Switzerland and Belgium, but most importantly, it is the language of Europe’s largest economy, Germany, and its neighbor Austria. Due to these nation’s scientific, technological and financial achievements, German is an important language for engineering, biotechnology, medicine, and global trade. The size of these economies alone should make the study of the german language worthwhile to anyone seeking to learn foreign languages as a meanse to integrate to a globalized economy.

#5.- Japanese

Worth $4.8 Trillion, and 6.27% of the World’s economy

Spoken in: Japan.

In my research about which language produced which amount of the world’s GDP I encountered many small, island nations that produced a minuscule amount of global trade. Languages such as Marshallese, Fijian, Kiswahili, Guyanese Creole, and even some in larger, but less developed countries such as Dzongkha, and Pashto seem to be displaced even nationally by other foreign languages for purposes of law and domestic and international trade. But Japan was the exception. Japan is an interesting outlier: a small country that is a collection of islands in the Pacific that speaks and indigenous language that is not spoken anywhere else in the world, but with an economy so great that makes the language worthwhile to international traders to be.

Japan is the world’s 3rd largest economy, and in fact it was the 2nd largest until it was displaced by China just a couple of years ago. It is a developed nation that, though growing, cannot sustain the same levels of growth that China is experiencing. However, Japan’s cultural, scientific, technical, and financial influence are still too great, as demonstrated in it’s GDP. Japan alone makes its language the 5th largest by GDP, which is impressive and speaks to the enduring importance of the country and its language in global trade.

#6.- French

Worth $3.9 Trillion, and 5.03% of the World’s economy

Spoken in: France, Canada, Belgium, Switzerland, Luxembourg, and over 20 countries in Africa, Asia, and the Americas.

French is the foreign language by excellence in most of the non-francophonic world. French is regardes as the language of foreign relations, and with good reason. France has been an important contributor to democracy and global diplomacy since the late 18th century, and in this regard survives to this day. But despite the economic size of France, the country of origin for this language, or the nearly 25 countries, or regions, who speak it as their main language, French still ranks behind other languages such as Spanish, German or Japanese in global economic importance.

Having said that, French is spoken as a secondary language in many countries around the world not counted here, including many countries whose first language is Arabic. France and the French regions of Canada, Switzerland, and Belgium are also home to important multinational corporations, as well as integral components of the Global Financial System, which is why French is still very significant. But as far as productivity goes, most french-speaking nations lag behind new global leaders.

#7.- Arabic

Worth $2.9 Trillion, and 3.77% of the World’s economy

Spoken in: Saudi Arabia, the United Arab Emirates, Egypt, and about a dozen other countries in Northern and Central Africa, and the Middle East.

Of the nearly 20 countries who speak Arabic as their first language, there are maybe 2 or 3 who do not owe their prosperity to the oil trade. Arabic is certainly the language to learn if you’re interested in trading in oil, or in petroleum engineering. However, this ignores the fact that many other countries in Central and South East Asia also have significant populations that speak Arabic, even if it’s not the official language there. Arabic, thus, can be an important language for Global Trade as well. Not to mention the fact that Egypt controls the Suez Canal, which is one of the most important logistics hubs in the World.

The importance of Arabic in diplomacy and international relations has increased, and will continue to increase as the Middle East and North Africa continue to resolves its issues. But for those seeking to learn foreign languages to participate in Global Trade, Arabic is important because of commodities traded, particularly oil, as well as due to its significance in fastly-developing economies in Asia.

#8.- Portuguese

Worth $2.6 Trillion, and 3.37% of the World’s economy

Spoken in: Brazil, Portugal, and half a dozen countries in Africa.

I was surprised by the amount of countries around the world that speak Portuguese as their main language. Several countries in Africa and Asia join Brazil and Portugal to make the Portoguese language an important and relevant language for Global Trade. Of course, Brazil is Latin America’s economic powerhouse, dwarfing its closest rival, Mexico, in terms of scale and productivity. But Portuguese may also be helpful in other developing economies with growth potential as well.

#9.- Italian

Worth $2.59 Trillion, and 3.36% of the World’s economy

Spoken in: Italy, Switzerland, and San Marino

Most of the value of the Italian language is derived from the Economy of Italy, one of the largest in Europe, and its intense exports around the world. Some of the finest and most luxurious products come from Italy. Despite its limited geographical reach, Italian remains an important language for world trade due to the importance of Italian corporations, as well as the prevalence of the language in Italian-led corporations and the global popularity of its products.

#10.- Russian

Worth $2.4 Trillion, and 3.17% of the World’s economy

Spoken in: Russia, Kazakhstan, Belarus, Turkmenistan, Tajikistan, and the Kyrgyz Republic

Despite current events that have led to trade sanctions against Russia, the Russian economy continues to be strong and important for Global Trade. Not only is it a global producer of oil, gas and energy, but it is also one of the most crucial logistics hubs for energetics between Europe and Asia. Its geographical location make Russia an important hub for World Trade. Russian is also spoken in many neighboring countries, including officially in mineral-rich Central Asian dictatorships, where skilled traders will undoubtedly seek raw materials for global production.

#11.- Korean

Worth $1.3 Trillion, and 1.7% of the World’s economy

Spoken in: North Korea, and South Korea

Of course, North Korea is a closed economy sanctioned by the entire planet and with a very small GDP, but South Korea is a technological and commercial powerhouse, home of multinationals such as Samsung, LG, Hyundai, or Daewoo… The presence of South Korean products in the modern economy will continue to gain significance in the coming years, despite the fact that Korea is only spoken in a small region of the planet. But the most promising aspect of the Korean language is the prospect of reunification. We all know North Korea will fail, it’s just a matter of when, and when that happens, South Korea and North Korea will reunify, as did East and West Germany, prompting opportunities for economic growth and expansion in the Korean peninusula.

#12.- Dutch

Worth $1.02 Trillion, and 1.3% of the World’s economy

Spoken in: The Netherlands, Belgium, and Suriname.

Despite it being limited in scope as a first language, the Dutch language also enjoys official status (sharing it with more common languages) in many other countries in Europe, Africa and the Caribbean, making its reach truly global. It is, therefore, an important language in global trade and logistics. This explains is significance in global GDP and its strenght and one of the most important languages in global trade.

Conclusion

English still dominates over a third of Global GDP, and learning English still seems to be sufficient to engage in global trade. However, this is rapidly changing with the rise of China and the expanding popularity of Spanish in the United States, as well as with the growing importance of other developing economies, including Mexico, Korea, Russia and Brazil.  What this means is that, if you already speak English as a first language, learning almost any other language will help you expand your global prespective. But Chinese and Spanish seem to be the best choice in terms of GDP reach, amount of consumers and purchasing power.

However, if you are looking for more specialized uses for your global skills, learning other languages might be more useful. German and Japanese continue to be, along with English, the leading languages for high technology engineering, both mechanical and automotive, as well as computer engineering. The rise of Korean corporations is giving the Korean language as growing importance in this field, the same way that the expansion of the Chinese economy is giving the same importance in this field to Chinese. If you are looking for trade mainly in the Middle East, or related to petroleum engineering, English and French continue to be important options, but so are Arabic and Russian. Finally, Dutch, French, Spanish, and Chinese continue to be important languages in logistics.

By Speaking English and Chinese, you can capture nearly 48% of Global GDP. I myself speak English, Spanish, and am learning Japanese. This combination will enable me to reach a 47% of global GDP as well.

Learning languages is difficult and time consuming, though it can be a lot of fun. But for busy businessmen looking for the highest return on investment, Chinese and English continue to be their best bets.

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