Tectonic shift in global economy
Tuesday, 25 September 2007
Syed Fattahul Alim
What has the future in store for the rising economic giants of Asia? The rising giants as everyone knows are the two fastest growing developing nations, China and India. China's success early on, when it took the open door economic policy in the mid-seventies, was witnessed by the world with bated breath as it made for the steepest possible growth path leaving the economists to speculate, if that was for real. Western experts both wondered how long the rise might continue and doubted if the steep rise may not overheat the economy leading to an implosion. Mercifully nothing like that happened and China cheerily marched in an uninterrupted fashion along the path of economic progress for the last three decades. Strangely though, it is still growing at a very fast rate defying all traditional economic predictions.
Let us hear what the former World Bank president James Wolfensohn has predicted about the prospects of China in the coming decades. If the present trend continues, by 2040 China will supersede the now biggest economy of the world, the USA. What is more, by 2050 it will be India's turn to claim the third place among the largest economies of the world.
Chinese leader Deng Xiao Ping had opened the country's window to the world. Similarly, the prime minister of India, during his earlier stint as India's finance minister had made a big stride in stimulating the private sector and inviting foreign investment in its traditionally conservative economy where the public sector played a big role. But the open window policy also worked miracles for the Indian case. The upshot of this development is that the world is witnessing a new phenomenon. With the rise of these two most populous Asian countries as also the economic giants, the centre of the world's economic gravity is undergoing, what Wolfensohn said, a 'tectonic shift' towards Asia.
In fact, it is not just because of China and India that this 'tectonic' shift is coming about. The East Asia is already an unbroken story of miracles, excepting, however, Japan. For Japan was the first ever Asian miracle, when most other countries of Asia were in a state of torpor under the yoke of colonialism.
Even after its destruction in the Second World War, it again raised its head like a phoenix from the ashes and then outpaced all the advanced economies of Europe and North America. The Western analysts of the Japanese phenomenon had long tried to explain it away as an exception that by a strange stroke of luck could somehow imitate the West without, however, being original about research and invention of new products. True it is the West where the industrial revolution first took place. And it is also true that new technologies were invented in the West as a continuation of the industrial and technological revolutions there. And Japan was undoubtedly lucky in that as an Asian country it was the first to peer into the technological secret of the West and, by imitating it, was able to prove that the secret of their success was not at least inimitable. The point here is the Western intelligentsia have always been wont to describe any industrial success in a country outside the European continent with a patronising sense of wonder. It was as if to say that the West is something special and that the mere mortals are not able to replicate it. So, Japan was the first country outside the geographical boundary called Europe that could not only imitate, or even replicate, in some cases it also outdid the West.
But of late the Western superiority and monopoly in the field of economy, industry, science and technology are being challenged in one country after another beyond the horizons of Europe and North America. A look at the string of nations in the Far East from Japan, South Korea, Taiwan, Singapore, Malaysia and now the emerging Viet Nam provides ample evidence in favour of this assertion. Now with China taking the developed world by storm with India hot on its heels, other remaining nations of this region, it is hoped, would soon join in in this march of miracle to outbid the West in every sphere of human endeavour.
There is, however, nothing to be shocked by this development. For thousands of years centres of human excellence have been shifting places from continent to continent. Europe has long dominated the world scene. It is now the turn of other continents to take the cue and continue the march of human progress.
The African nations, in order that they may not miss the bus have started to adjust with this emerging new reality and have started engaging with China and India bypassing the traditionally advanced nations. While some developing and least developed nations are being pragmatic enough to adjust with latest shift in the global economic power equation, the developed nations are not being equally responsive to this 'tectonic shift'. On the contrary, far from looking at these Asian economic power houses with a practical attitude, the advanced nations are still treating them in a way that smacks of 'colonial' era mentality, Wolfensohn complains. Understandably, as a representative of the advanced nations, especially of the West, he urges the advanced nations to awaken to this new order of things on the global scene.
While singing praise for this success stories in different countries of East and South Asia and the shift in the global economic centre of gravity, it would be worthwhile to dispel some misplaced notions about the march of the particular type of development under scrutiny.
Economies that had long been denied their natural growth by keeping their doors shut to the external world around are now undergoing unprecedented transformations. This is the result of a new awakening among the entrepreneur class. The floodgate of investment and technology from the advanced world are now pouring into these developing economies unfolding their productivity in an unprecedented scale. But one must not at the same time be forgetful of the fact that this growth has also its limitations. The urban centred growth is only creating a powerful and wealthy middle class in the cities. In most cases, this very fast economic growth is also coming at a cost. Irreversible damage to the environment is being done on the one hand, while the poor in the countryside is being further alienated and pauperised on the other. Both the predicaments have again put the developing nations face to face with yet another set of challenges. The challenges are of saving the human habitation where the economic growth is taking place, reaching the benefits of growth to the rest of the impoverished people within the national borders of the economies concerned and extending a helping hand to the neighbouring, but still struggling, nations in the region.
Countries like Bangladesh, for example, are yet to catch up with the tempo of growth its neighbours both in the east and west are witnessing. Should the march of growth bypass the less fortunate neighbours?
It is time the question of growth grew out of its nationalistic trappings as well as myopia and chauvinism and reach out to the impoverished masses within the regional context. For like damaged environment, unaddressed poverty has the potential to foil the very purpose of growth.
What has the future in store for the rising economic giants of Asia? The rising giants as everyone knows are the two fastest growing developing nations, China and India. China's success early on, when it took the open door economic policy in the mid-seventies, was witnessed by the world with bated breath as it made for the steepest possible growth path leaving the economists to speculate, if that was for real. Western experts both wondered how long the rise might continue and doubted if the steep rise may not overheat the economy leading to an implosion. Mercifully nothing like that happened and China cheerily marched in an uninterrupted fashion along the path of economic progress for the last three decades. Strangely though, it is still growing at a very fast rate defying all traditional economic predictions.
Let us hear what the former World Bank president James Wolfensohn has predicted about the prospects of China in the coming decades. If the present trend continues, by 2040 China will supersede the now biggest economy of the world, the USA. What is more, by 2050 it will be India's turn to claim the third place among the largest economies of the world.
Chinese leader Deng Xiao Ping had opened the country's window to the world. Similarly, the prime minister of India, during his earlier stint as India's finance minister had made a big stride in stimulating the private sector and inviting foreign investment in its traditionally conservative economy where the public sector played a big role. But the open window policy also worked miracles for the Indian case. The upshot of this development is that the world is witnessing a new phenomenon. With the rise of these two most populous Asian countries as also the economic giants, the centre of the world's economic gravity is undergoing, what Wolfensohn said, a 'tectonic shift' towards Asia.
In fact, it is not just because of China and India that this 'tectonic' shift is coming about. The East Asia is already an unbroken story of miracles, excepting, however, Japan. For Japan was the first ever Asian miracle, when most other countries of Asia were in a state of torpor under the yoke of colonialism.
Even after its destruction in the Second World War, it again raised its head like a phoenix from the ashes and then outpaced all the advanced economies of Europe and North America. The Western analysts of the Japanese phenomenon had long tried to explain it away as an exception that by a strange stroke of luck could somehow imitate the West without, however, being original about research and invention of new products. True it is the West where the industrial revolution first took place. And it is also true that new technologies were invented in the West as a continuation of the industrial and technological revolutions there. And Japan was undoubtedly lucky in that as an Asian country it was the first to peer into the technological secret of the West and, by imitating it, was able to prove that the secret of their success was not at least inimitable. The point here is the Western intelligentsia have always been wont to describe any industrial success in a country outside the European continent with a patronising sense of wonder. It was as if to say that the West is something special and that the mere mortals are not able to replicate it. So, Japan was the first country outside the geographical boundary called Europe that could not only imitate, or even replicate, in some cases it also outdid the West.
But of late the Western superiority and monopoly in the field of economy, industry, science and technology are being challenged in one country after another beyond the horizons of Europe and North America. A look at the string of nations in the Far East from Japan, South Korea, Taiwan, Singapore, Malaysia and now the emerging Viet Nam provides ample evidence in favour of this assertion. Now with China taking the developed world by storm with India hot on its heels, other remaining nations of this region, it is hoped, would soon join in in this march of miracle to outbid the West in every sphere of human endeavour.
There is, however, nothing to be shocked by this development. For thousands of years centres of human excellence have been shifting places from continent to continent. Europe has long dominated the world scene. It is now the turn of other continents to take the cue and continue the march of human progress.
The African nations, in order that they may not miss the bus have started to adjust with this emerging new reality and have started engaging with China and India bypassing the traditionally advanced nations. While some developing and least developed nations are being pragmatic enough to adjust with latest shift in the global economic power equation, the developed nations are not being equally responsive to this 'tectonic shift'. On the contrary, far from looking at these Asian economic power houses with a practical attitude, the advanced nations are still treating them in a way that smacks of 'colonial' era mentality, Wolfensohn complains. Understandably, as a representative of the advanced nations, especially of the West, he urges the advanced nations to awaken to this new order of things on the global scene.
While singing praise for this success stories in different countries of East and South Asia and the shift in the global economic centre of gravity, it would be worthwhile to dispel some misplaced notions about the march of the particular type of development under scrutiny.
Economies that had long been denied their natural growth by keeping their doors shut to the external world around are now undergoing unprecedented transformations. This is the result of a new awakening among the entrepreneur class. The floodgate of investment and technology from the advanced world are now pouring into these developing economies unfolding their productivity in an unprecedented scale. But one must not at the same time be forgetful of the fact that this growth has also its limitations. The urban centred growth is only creating a powerful and wealthy middle class in the cities. In most cases, this very fast economic growth is also coming at a cost. Irreversible damage to the environment is being done on the one hand, while the poor in the countryside is being further alienated and pauperised on the other. Both the predicaments have again put the developing nations face to face with yet another set of challenges. The challenges are of saving the human habitation where the economic growth is taking place, reaching the benefits of growth to the rest of the impoverished people within the national borders of the economies concerned and extending a helping hand to the neighbouring, but still struggling, nations in the region.
Countries like Bangladesh, for example, are yet to catch up with the tempo of growth its neighbours both in the east and west are witnessing. Should the march of growth bypass the less fortunate neighbours?
It is time the question of growth grew out of its nationalistic trappings as well as myopia and chauvinism and reach out to the impoverished masses within the regional context. For like damaged environment, unaddressed poverty has the potential to foil the very purpose of growth.