Blogging Round 2

What emerging realities do you see in light of the emerging economies? Which among these new economies do you feel would outpace the others? Quote examples and facts to support your argument.

As a part of my curriculum for my Economics degree I had once read a paper that spoke on using historical trends to develop expectation of the future. It stated vehemently that the reasons for the emergence of the western countries no longer exists and hence can never be replicated by the new emerging economies. Every time I come across an article on the BRIC countries or the Goldman’s report on India and China this paper seems to come back to mind.
Do I agree with this paper, well yes and no. Economically the paper is right, the world has changed, resources have changed, international dynamics are different and countries who will be bigger, who will grow faster and who will become the so called super powers will do so, on different pillars of reason. However socially I see some very common trends developing and as much as the social needs of people have a correlation to the economics of business I see a high degree of similarity between the then and now ‘emerging economies’.
Possibly these reasons are inbuilt into the social fabric of mankind. The desire for a higher quality of lifestyle, lower saving rate (visible among the yuppies), greater proportion of expense on luxury and entertainment etc.
Some of the emerging realities that I see are:
1. The creation of new centres of power – The world is no longer Uni-polarized. It would be difficult to say that it is bi polar but I think that there is such a high degree of mutual dependence among nations that no country is all powerful. The Chinese and Arabs own a larger part of the now severely contracted US economy, the west is dependent on Asia for their manufactured good, on South America and the Middle East for the raw material supplies and what’s more they no longer have the degree of military control or capitalist ability to take them against their will.
2. Knowledge as the most valuable resource – This is not to say that knowledge did not exist earlier and was never important. But the proportions now are unlike ever before. The beauty about knowledge which makes it all the power valuable is its mobility. There is no law, no tax, no boundaries when it comes to creating and sharing knowledge. The emerging economies have successfully created economies based on knowledge and have a created a new niche for themselves.
3. Domestic resilience – Another emerging reality is how strong domestic demand in these countries is. Backed by large populations, growing per capita income and latent demand from all corners of the economy, these economies are more capable of weathering a global storm such as the one created by the subprime crisis.

I wish I could say that India is the emerging economy that I would definitely put my bets on. ‘Inspite of the Gods’ written by Edward Luce explain why. We can only go so far if we are constrained by infrastructure, political games, bureaucracy and narrow mindedness. I would bet on India when it comes to fundamentals of the economy, the strength of our workforce and are ability to grow but for solely this one reason I would choose the Chinese economy.