Friday, September 21, 2007

Developed Economies Not Doing Enough To Recognise Asian Growth

by Stewart Douglas

The more developed global economies are not doing enough to keep up with the rise of India and China as economic superpowers, which could lead to significant global economic problems, according to a speech made today by a former president of the World Bank.

The richer economies have not yet adapted to the fact that the global power shift is headed towards the emerging giants in the East, and this could bring significant problems, according to James Wolfensohn formerly of the World Bank.

He also added that China and India would succeed as the number one and two global economies in terms of wealth and size by as early as 2040, leaving traditional superpowers trailing in their wake.

China has seen significant economic growth over the last few years, strongly trumping the rate of any other global economy. With growth figures exceeding double digits for several consecutive years, analysts are forecasting that at present rate China will soon overtake the US at the top of the world economic leaderboard.

Likewise, India has seen massive growth, largely as a result of a developing services sector through outsourcing from currenty large economies like the US and Europe.

Whilst the growth is set to continue in India for the foreseeable future, some analysts are predicting that it will require clever economic management to maintain India at its current level of growth, particularly with cheap labour being their most valuable commodity at present.

However both economies are currently contending with the problems of inflation, which has called for significant interest rate hikes which could affect growth in the medium term.

Wolfensohn criticised the ‘colonial’ attitudes of Western economies to the emerging Easter powers for leaving many established economies unprepared for the ‘tectonic shift’ the global balance of power will see over the coming decades.

 

 

 

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