Introduction: The dawn of 21st century has changed the scene of the world economy and shifted the Centre of economic growth from Western hemisphere to the Asian Continent. The global financial crisis of 2008 and European debt crisis of 2010 have exposed inherent weak- ness of G-7 economies, which are facing the challenges of twin deficits, falling productivity, rising debts and aging population. In contrast, the emerging economies particularly, China, India and Brazil, have shown robust economic growth during 2000-2010. China’s fast economic growth since 1960s was the result of gradual shift in its economic system, open door policy and its accession to the world trade organization. The institutional reforms and access to foreign markets has been followed by investment strategies expanded 45% of Chinese GDP during last 40 years. The consistent vertical economic growth has no precedent in the economic history of the world. China has increased its share in world trade from 0.5% in 1960 to 10% in 2010 and accumulated foreign exchange reserves of US$3.19 trillion by March 2013. It is not less than a miracle. Objectives: The objective of this dissertation is to measure the changes taken place in world economy during 2000-2010 and its impact on assets allocation, employment labour productivity, poverty, and allocation of resources. For this purpose the author has selected total 14 countries as a sample and divided them into two groups: G-7 and E-7. The G-7group Include USA, Ger- many, France, UK, Italy, Japan and Canada while E-7 contains China, India, Brazil, Russia, Indonesia, Turkey and Pakistan. Methodology: The methodology used in this research study is to compare different economic and financial indicators of these two groups of countries in order to obtain desired results. Mostly time series and cross sectional secondary data, collected from data base of IMF, World Bank, China Bureau of National Statistics, US Federal reserves, relevant international research journals and books, has been used. Different statistical and mathematical techniques have been used to estimate changes in selected variables. OLS method was used to measure China economic growth while mathematical model was used to measure US slowdown puzzle. Ratio analysis and content analysis were used to estimate the data. Our study specific period is spread over 10 years from 2000-2010 but we used data beyond this period wherever it is necessary to analyze the genesis of existing world economic scenario. Total 13 variables have been selected for this study. Among them main variables are: labour productivity, investment, capital accumulation, exports, R&D expenses, output, real exchange rate and technological progress. Different tests were applied to test the stability of the model Findings: The results of the study are very significant because we found that increase in national income of emerging economics has brought trickle down effects and reduced poverty and inequality level in emerging economies. Only in China, about 400 million people have come out of poverty trap due to rising employment opportunities. The share of E-7 economies in the world R& D has increased from14% in 2001 to 20.1% in 2007, while the share of G-7 economies has declined by 2.4% during the same period. In our empirical analysis, the relationship between real gross fixed capital formation that is used as a proxy to capital and real gross domestic product of China is found positive. Theoretically and econometrically it is logical and significant because it is statistically significant at 1 percent level and having more investment in the country will cause of higher incomes as evident in the case of China. Investment in China has been a source of higher incomes from 1980s and now it is leading over world economy. Our empirical evidence shows that almost, 1 percent extra investment in china may raise on average national incomes by 0.26 percent. Our study found negative relationship between exports and real exchange rates. On average one percent increase in the real official exchange rate will lower real gross domestic product (GDP) by 0.07 percent. The negative effect is so small in China’s case because of tight control over official exchange range but it should not be ignored in general. Our results show that traditional production function “AK” and technological progress production function “R&D” are different. In “AK” production function the input and output increase in the same ratio as we increase inputs, we will get growth in output in the same ratio. There is a constant return to scale in “AK” production function. In contrast, in “R&D” production function diminishing return to scale has been noted during out empirical analysis of U.S. productivity growth slowdown case because the increase in the number of researchers and R&D expenditures does not increase output in the same ratio. Our empirical analysis shows if we increase the number of researchers by 100% we will get only 40 percent output. The 60 percent output gap is huge. This is one of the main apparent cause of U.S. productivity slowdown.