The Economic Basis of Global Power: VIP2 A Simple Index of National Power Potential

Though Paul Kennedy and other scholars of National Security, Diplomacy and Foreign relations have emphasized the importance of the economy in National Power, not many economists have taken an interest in such issues. The current paper is an attempt to bridge the divide.The present paper shows how the basic building blocs of growth theory, the aggregate production function, factor productivity and technical change can be used to define a simple index of global ‘power potential’ (VIP2). The paper provides a relatively objective measure of a when a country can be classed as a (potential) ‘global power,’ a ‘regional power’ or a regional VIP2 . The paper shows that India, which is currently merely a regional power, will become a global power within the next 20 years. It also analyses how this affects India’s case for permanent, veto-bearing membership of the UN security council.