Some would argue that the East will come to the West – future tense. By 2050, the BRIC countries plus Indonesia, Mexico and Turkey will likely surpass the G7 (source: PwC, 2006). Some of us will be dead by then, some of us just old. Much closer than that is the number of years it will take China’s GDP to surpass the remainder of the G7 – maybe 2025 by the time it surpasses the US.
I would argue that the East has already come to the West.
- The East is still growing while the West is in financial ruin. Most economists are still projecting strong growth in China, India and the Middle East, though slightly reduced from previous years.
- Sovereign investment funds in the East are financing many banks in the West at a time when capital is desperately needed.
- The BRIC countries are planning coordinated measures to boost trade, and China is adopting measures to re-establish market confidence both at home and abroad.
- The East has increasingly held the government debt of the West.
The East/West divide remains a dichotomy, never both so distinct but also interlinked. With many developed markets in melt-down, the lessons we can learn from the Middle and Far East as well as the business growth and opportunities it provides may never be more valuable.
1 response so far ↓
1 Rick DeLotto // Nov 13, 2008 at 8:52 pm
Looks like the developing markets are in even more of a meltdown, regretfully, and have far less of a cushion to fall back on. How long will a Shining City last if it is surrounded by a few million (literally) starving refugees from the countryside? East and West is one thing—North and South may be bigger, and nowhere near as polite.
Commodity sales have dropped across the world—even for strategic materials—and there were few “deep” piles laying about before the downturn. Some of the Really Big Commodity Exporters may have to scale back their social spending enough to hurt—this is going to be real rough since food stockpiles are at a deep low ebb.
The “foreign funding” issue fades, at least for the US, if you look at history. Most of the big advances over here were funded by overseas investors– canals, railroads, steel, etc. Net capital flow was TO the US until the end of WW2 (Lady Liberty has greated both The Wrteched Refuse AND Flight Capital) and may just be balancing out a bit. US bonds have long been a favorite of folks who loved their homeland…but thought it prudent to tuck a little bit away off to the side somewhere.
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